Encompass Health Rehabilitation Hospital of Fort Mill 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. "The need for inpatient rehabilitative care in the Fort Mill and greater Charlotte area has been growing rapidly" ...

Encompass Health Corporation (EHC) shares have shot up 39.4% in the year-to-date period, outperforming the industry's return of 17.9% and the S&P 500 Index's rise of 18.4%. Growing patient volumes and impressive growth-related initiatives appear to have catalyzed this bullishness. Currently priced at $93.05, the stock is just 1.4% below its 52-week high of $94.38. This proximity underscores investor confidence and market optimism about this healthcare company's prospects. It has the ingredients for further ...

Core Viewpoint - Encompass Health (EHC) has been upgraded to a Zacks Rank 2 (Buy), indicating a positive earnings outlook that may lead to increased stock prices [1][3]. Earnings Estimates and Stock Price Impact - The Zacks rating system is based on changes in earnings estimates, which are strongly correlated with stock price movements [4][6]. - Rising earnings estimates for Encompass Health suggest an improvement in the company's underlying business, likely resulting in higher stock prices [5][10]. Earnings Estimate Revisions - For the fiscal year ending December 2024, Encompass Health is expected to earn $4.16 per share, reflecting a 14.3% increase from the previous year [8]. - Over the past three months, the Zacks Consensus Estimate for Encompass Health has increased by 1.5% [8]. Zacks Rank System - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with only the top 20% receiving a 'Strong Buy' or 'Buy' rating [9][10]. - Encompass Health's upgrade to Zacks Rank 2 places it in the top 20% of Zacks-covered stocks, indicating strong potential for market-beating returns [10].

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Financial Performance - Encompass Health reported a net income of $114.1 million for the three months ended June 30, 2024, compared to $91.4 million for the same period in the previous year, representing a year-over-year increase of approximately 25%[18]. - Basic earnings per share attributable to Encompass Health common shareholders from continuing operations was $1.14 for the current quarter, up from $0.92 in the prior year, reflecting a growth of approximately 24%[18]. - Net income for the six months ended June 30, 2024, was $282.3 million, compared to $226.2 million for the same period in 2023, representing a 24.9% increase[22]. - Net operating revenues for the three months ended June 30, 2024, were $1,301.2 million, an increase of 9.6% compared to $1,187.1 million for the same period in 2023[29]. - Medicare revenues increased to $841.6 million for the three months ended June 30, 2024, up from $763.2 million in the prior year, representing a growth of 10.3%[29]. - The diluted earnings per share for the six months ended June 30, 2024, is $2.22, compared to $1.77 for the same period in 2023, indicating an increase of approximately 25.4%[49]. Assets and Liabilities - Total current assets increased to $938.1 million as of June 30, 2024, compared to $841.8 million at the end of the previous year, marking an increase of about 11.5%[19]. - Total assets reached $6.3887 billion as of June 30, 2024, compared to $6.1024 billion at the end of 2023, indicating a growth of approximately 4.7%[19]. - Current liabilities rose to $694.5 million, up from $656.4 million, reflecting an increase of about 5.8%[19]. - Long-term debt, net of current portion, was reported at $2.6841 billion, slightly down from $2.6878 billion, showing a marginal decrease[19]. - The carrying amount of long-term debt as of June 30, 2024, is $1.588 billion, with estimated fair values of $1.588 billion[45]. Cash Flow and Dividends - Total cash provided by operating activities for the six months ended June 30, 2024, was $456.2 million, up from $434.6 million in the prior year[24]. - The company declared dividends of $0.15 per share, totaling approximately $15.4 million for the quarter[20]. - The company declared dividends of $0.30 per share, totaling $30.8 million for the six months ended June 30, 2024[22]. - The total balance of cash, cash equivalents, and restricted cash at the end of the period was $182.1 million, compared to $154.0 million at the end of June 30, 2023[26]. - Encompass Health's cash and cash equivalents increased to $154.4 million, up from $69.1 million, representing a significant increase of approximately 123%[19]. Operational Highlights - The company operates 163 inpatient rehabilitation hospitals across 37 states and Puerto Rico as of June 30, 2024[27]. - Stock-based compensation for the six months ended June 30, 2024, was $22.9 million, slightly down from $23.5 million in the same period of 2023[24]. - The company reported a loss from discontinued operations of $2.5 million for the six months ended June 30, 2024[24]. - The company repurchased common stock totaling $16.8 million during the six months ended June 30, 2024[24]. Risks and Compliance - The company experienced competitive pressures in the healthcare industry, which could adversely affect revenues and profitability[12]. - Regulatory changes and compliance costs continue to pose risks that may impact financial results and operational efficiency[10]. - The provision for income tax expense for the six months ended June 30, 2024, is $76.6 million, compared to $64.7 million for the same period in 2023, reflecting an increase of approximately 18.4%[47]. Investments and Joint Ventures - The company expects to record a post-tax gain of approximately $23 million from the expansion of its joint venture with Piedmont Healthcare, which will increase capital in excess of par value[31]. - A joint venture with the University of Maryland Rehabilitation Institute resulted in a $26.3 million contribution for a 50% ownership interest in a 60-bed hospital effective July 1, 2023[32]. - Capital contributions from consolidated affiliates amounted to $36.6 million for the six months ended June 30, 2024[22]. Accounting and Fair Value - The company is evaluating the impact of new accounting standards issued by the FASB, including ASU 2023-07 and ASU 2023-09, which may affect future financial disclosures[33][34]. - As of June 30, 2024, the fair value of equity securities is $117.3 million, with $4.0 million from Level 1 inputs and $113.3 million from Level 2 inputs[42]. - The fair value of redeemable noncontrolling interests as of June 30, 2024, is $48.6 million[42]. - The total assets of consolidated variable interest entities as of June 30, 2024, were $204.1 million, a decrease from $207.7 million at the end of 2023[36]. - The company consolidated eight variable interest entities with ownership percentages ranging from 50.0% to 75.0% as of June 30, 2024[35].

| --- | --- | --- | --- | --- | --- | --- | --- | --- | |----------------|-------|------------------------------------|-------|-------|-------|-------|-------|-------| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2024 Second Quarter Earnings Call | | | | | | | | August 6, 2024 | | Supplemental information | | | | | | | | | | | | | | | | | | | | | | | | | | | Forward-looking statements The information contained in this presentation includes certain estimates, projecti ...

Encompass Health Corporation (NYSE:EHC) Q2 2024 Earnings Call August 6, 2024 10:00 AM ET Company Participants Mark Miller - Chief Investor Relations Officer Mark Tarr - President and Chief Executive Officer Doug Coltharp - Executive Vice President and Chief Financial Officer Conference Call Participants Whit Mayo - Leerink Partners A.J. Rice - UBS Andrew Mok - Barclays Pito Chickering - Deutsche Bank Kevin Fischbeck - Bank of America Scott Fidel - Stephens Brian Tanquilut - Jefferies Jared Haase - William B ...

[Executive Summary & Highlights](index=1&type=section&id=Executive%20Summary%20%26%20Highlights) [Q2 2024 Performance Overview](index=1&type=section&id=Q2%202024%20Performance%20Overview) Encompass Health reported strong Q2 2024 results with significant revenue and Adjusted EBITDA growth, driven by increased discharges and net revenue per discharge Q2 2024 Financial Metrics | Metric | Q2 2024 | Q2 2023 | Change | Percent Change | | :------------------------------------------------------------------- | :-------- | :-------- | :-------- | :------------- | | Net operating revenue (In Millions) | $1,301.2 | $1,187.1 | $114.1 | 9.6 % | | Income from continuing operations attributable to Encompass Health per diluted share | 1.13 | 0.91 | 0.22 | 24.2 % | | Adjusted earnings per share | 1.11 | 0.95 | 0.16 | 16.8 % | | Cash flows provided by operating activities (In Millions) | 217.4 | 206.7 | 10.7 | 5.2 % | | Adjusted EBITDA (In Millions) | 271.8 | 249.6 | 22.2 | 8.9 % | | Adjusted free cash flow (In Millions) | 142.5 | 124.2 | 18.3 | 14.7 % | | Discharges | 60,833 | 57,011 | | 6.7 % | | Same-store discharge growth | | | | 4.8 % | | Net patient revenue per discharge | $20,803 | $20,387 | | 2.0 % | - Revenue growth of **9.6%** resulted primarily from discharge growth of **6.7%**, including same-store growth of **4.8%**[4](index=4&type=chunk) - Cash flows provided by operating activities increased **5.2%** to **$217.4 million**, primarily due to an increase in net income partly offset by higher cash tax payments[4](index=4&type=chunk) - Adjusted EBITDA increased **8.9%**, primarily from increased revenue[4](index=4&type=chunk) [CEO Commentary](index=1&type=section&id=CEO%20Commentary) CEO Mark Tarr expressed satisfaction with Q2 performance, highlighting strong discharge growth, increased revenue and Adjusted EBITDA, capacity expansion, and resumed share repurchases, maintaining optimism for long-term prospects - Strong discharge growth facilitated an increase of **9.6%** in revenue and **8.9%** in Adjusted EBITDA[3](index=3&type=chunk) - During the quarter, **194 beds** were added to capacity, and continued progress was made across key operating initiatives[3](index=3&type=chunk) - Activity under the share repurchase authorization was resumed, and the company remains highly-optimistic about long-term prospects[3](index=3&type=chunk) [2024 Financial Guidance](index=2&type=section&id=2024%20Financial%20Guidance) [Updated Full-Year 2024 Guidance](index=2&type=section&id=Updated%20Full-Year%202024%20Guidance) Encompass Health increased its full-year 2024 guidance for net operating revenue, Adjusted EBITDA, and Adjusted earnings per share, reflecting confidence in continued performance Full-Year 2024 Guidance Comparison | Metric | Previous Guidance | Updated Guidance | | :------------------------------------------------------------------- | :---------------- | :--------------- | | Net operating revenue (In Millions) | $5,250 to $5,325 | $5,275 to $5,350 | | Adjusted EBITDA (In Millions) | $1,030 to $1,065 | $1,040 to $1,075 | | Adjusted earnings per share from continuing operations attributable to Encompass Health | $3.86 to $4.11 | $3.97 to $4.22 | - The Company does not provide guidance for comparable GAAP measures for Adjusted EBITDA and adjusted earnings per share due to the inability to predict, with reasonable certainty, the future impact of items outside its control or not indicative of ongoing operating performance[5](index=5&type=chunk)[10](index=10&type=chunk) - Reasonably estimable GAAP measures for 2024 include approximately **$140 million** for interest expense and amortization of debt discounts and fees, and approximately **$10 million** for amortization of debt-related items[11](index=11&type=chunk) [Company Information](index=2&type=section&id=Company%20Information) [About Encompass Health](index=2&type=section&id=About%20Encompass%20Health) Encompass Health is the largest owner and operator of inpatient rehabilitation hospitals in the U.S., with **164 hospitals** across **38 states** and Puerto Rico, providing high-quality rehabilitative care - Encompass Health is the largest owner and operator of inpatient rehabilitation hospitals in the United States[7](index=7&type=chunk) - The company has a national footprint including **164 hospitals** in **38 states** and Puerto Rico[7](index=7&type=chunk) - It provides high-quality, compassionate rehabilitative care for patients recovering from major injury or illness, utilizing advanced technology and innovative treatments[7](index=7&type=chunk) [Conference Call & Webcast](index=2&type=section&id=Conference%20Call%20%26%20Webcast) The company will host an investor conference call on **August 6, 2024**, at **10:00 a.m. ET** to discuss Q2 2024 results, with supplemental information available online - An investor conference call will be hosted on **Tuesday, August 6, 2024**, at **10:00 a.m. Eastern Time** to discuss Q2 2024 results[6](index=6&type=chunk) - Supplemental information for the call will be posted on the company's website at http://investor.encompasshealth.com[6](index=6&type=chunk) [Other Information & Non-GAAP Measures](index=2&type=section&id=Other%20Information%20%26%20Non-GAAP%20Measures) This section directs readers to SEC filings (**10-Q**, **8-K**) for detailed information and provides context on the use and reconciliation of non-GAAP financial measures, explaining why GAAP guidance is not provided for certain metrics - This press release is summarized and should be read in conjunction with the Company's Quarterly Report on Form **10-Q** for the quarter ended **June 30, 2024**, and Current Report on Form **8-K** filed on **August 5, 2024**[8](index=8&type=chunk) - The financial data includes non-GAAP financial measures such as **adjusted earnings per share**, **leverage ratio**, **Adjusted EBITDA**, and **adjusted free cash flow**, with reconciliations to GAAP measures provided[9](index=9&type=chunk) - The Company does not provide GAAP guidance for certain measures due to the inability to predict, with reasonable certainty, the future impact of items deemed outside its control or not indicative of ongoing operating performance[10](index=10&type=chunk) [Financial Statements (Unaudited)](index=4&type=section&id=Financial%20Statements%20%28Unaudited%29) [Condensed Consolidated Statements of Comprehensive Income](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) The unaudited condensed consolidated statements of comprehensive income show a significant increase in net operating revenues and net income for both the three and six months ended **June 30, 2024**, compared to the prior year Condensed Consolidated Statements of Comprehensive Income | Metric | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :------------------------------------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net operating revenues (In Millions) | $1,301.2 | $1,187.1 | $2,617.2 | $2,347.5 | | Total operating expenses (In Millions) | 1,085.6 | 1,003.2 | 2,194.1 | 1,985.0 | | Income from continuing operations before income tax expense (In Millions) | 186.0 | 151.2 | 364.4 | 297.4 | | Net and comprehensive income attributable to Encompass Health (In Millions) | 114.1 | 91.4 | 226.6 | 179.1 | | Diluted earnings per share attributable to Encompass Health common shareholders: Continuing operations | $1.13 | $0.91 | $2.24 | $1.79 | [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The unaudited condensed consolidated balance sheets indicate an increase in total assets and shareholders' equity as of **June 30, 2024**, compared to **December 31, 2023**, with a notable rise in cash and cash equivalents Condensed Consolidated Balance Sheets | Metric | June 30, 2024 (In Millions) | December 31, 2023 (In Millions) | | :--------------------------------------------- | :-------------------------- | :------------------------------ | | Cash and cash equivalents | $154.4 | $69.1 | | Total current assets | 938.1 | 841.8 | | Property and equipment, net | 3,438.9 | 3,301.0 | | Total assets | $6,388.7 | $6,102.4 | | Total current liabilities | 694.5 | 656.4 | | Long-term debt, net of current portion | 2,684.1 | 2,687.8 | | Total liabilities | 3,858.7 | 3,805.2 | | Total shareholders' equity | 2,481.4 | 2,255.2 | [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) The unaudited condensed consolidated statements of cash flows show an increase in net cash provided by operating activities for the six months ended **June 30, 2024**, while investing activities primarily involved capital expenditures and financing activities included debt payments, dividends, and share repurchases Condensed Consolidated Statements of Cash Flows | Metric | Six Months Ended June 30, 2024 (In Millions) | Six Months Ended June 30, 2023 (In Millions) | | :-------------------------------------------------------- | :------------------------------------------- | :------------------------------------------- | | Net cash provided by operating activities | $456.2 | $434.6 | | Net cash used in investing activities | (288.1) | (232.5) | | Net cash used in financing activities | (90.2) | (101.5) | | Increase in cash, cash equivalents, and restricted cash | 77.9 | 100.6 | | Cash, cash equivalents, and restricted cash at end of period | $182.1 | $154.0 | [Supplemental Financial Information](index=8&type=section&id=Supplemental%20Financial%20Information) [Adjusted Earnings Per Share Reconciliations](index=8&type=section&id=Adjusted%20Earnings%20Per%20Share%20Reconciliations) This section provides detailed reconciliations related to earnings per share, including the calculation of income from continuing operations attributable to Encompass Health and adjustments to arrive at adjusted EPS for various periods [Income from Continuing Operations Attributable to Encompass Health](index=8&type=section&id=Income%20from%20Continuing%20Operations%20Attributable%20to%20Encompass%20Health) This section provides a reconciliation of Adjusted EBITDA to Income from continuing operations attributable to Encompass Health, detailing adjustments for depreciation, interest, stock-based compensation, and other non-operating items for both three and six-month periods Income from Continuing Operations Attributable to Encompass Health Reconciliation | Metric | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :------------------------------------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Adjusted EBITDA (In Millions) | $271.8 | $249.6 | $544.8 | $478.6 | | Depreciation and amortization (In Millions) | (72.9) | (72.6) | (143.2) | (136.5) | | Interest expense and amortization of debt discounts and fees (In Millions) | (34.3) | (36.3) | (69.5) | (72.7) | | Stock-based compensation (In Millions) | (13.6) | (15.6) | (22.9) | (23.5) | | Income from continuing operations (In Millions) | $115.3 | $92.6 | $229.1 | $181.3 | | Diluted earnings per share | $1.13 | $0.91 | $2.24 | $1.79 | [Adjusted Earnings Per Share Summary](index=9&type=section&id=Adjusted%20Earnings%20Per%20Share%20Summary) This table presents the reported and adjusted earnings per share, highlighting adjustments for asset impairment, income tax, state regulatory changes, and fair market value of equity securities Adjusted Earnings Per Share Summary | Metric | Q2 2024 | Q2 2023 | 6 Months 2024 | 6 Months 2023 | | :----------------------------------------------- | :------ | :------ | :------------ | :------------ | | Earnings per share, as reported | $1.13 | $0.91 | $2.24 | $1.79 | | Adjustments, net of tax: | | | | | | Asset impairment impact | — | — | 0.02 | — | | Income tax adjustments | (0.02) | — | (0.03) | — | | State regulatory change impact | — | 0.03 | — | 0.03 | | Change in fair market value of equity securities | — | 0.01 | — | — | | Adjusted earnings per share | $1.11 | $0.95 | $2.23 | $1.83 | [Detailed Adjusted EPS Reconciliations (Q2 2024, Q2 2023, 6 Months 2024, 6 Months 2023)](index=11&type=section&id=Detailed%20Adjusted%20EPS%20Reconciliations%20%28Q2%202024%2C%20Q2%202023%2C%206%20Months%202024%2C%206%20Months%202023%29) These detailed tables reconcile diluted earnings per share from continuing operations to adjusted earnings per share for **Q2 2024**, **Q2 2023**, **six months 2024**, and **six months 2023**, showing specific adjustments for income tax, state regulatory changes, asset impairment, and fair market value of equity securities Q2 2024 Diluted EPS Reconciliation | Metric | As Reported | Income Tax Adjustments | Change in Fair Market Value of Equity Securities | As Adjusted | | :------------------------------------------------------------------- | :---------- | :--------------------- | :----------------------------------------------- | :---------- | | Income from continuing operations attributable to Encompass Health (In Millions) | $115.3 | $(2.4) | $0.3 | $113.2 | | Diluted earnings per share from continuing operations | $1.13 | $(0.02) | — | $1.11 | Q2 2023 Diluted EPS Reconciliation | Metric | As Reported | State Regulatory Change Impact | Income Tax Adjustments | Change in Fair Market Value of Equity Securities | As Adjusted | | :------------------------------------------------------------------- | :---------- | :----------------------------- | :--------------------- | :----------------------------------------------- | :---------- | | Income from continuing operations attributable to Encompass Health (In Millions) | $92.6 | $2.9 | $0.1 | $0.8 | $96.4 | | Diluted earnings per share from continuing operations | $0.91 | $0.03 | — | $0.01 | $0.95 | 6 Months 2024 Diluted EPS Reconciliation | Metric | As Reported | Asset Impairment Impact | Income Tax Adjustments | Change in Fair Market Value of Equity Securities | As Adjusted | | :------------------------------------------------------------------- | :---------- | :---------------------- | :--------------------- | :----------------------------------------------- | :---------- | | Income from continuing operations attributable to Encompass Health (In Millions) | $229.1 | $1.8 | $(3.0) | $0.1 | $228.0 | | Diluted earnings per share from continuing operations | $2.24 | $0.02 | $(0.03) | — | $2.23 | 6 Months 2023 Diluted EPS Reconciliation | Metric | As Reported | State Regulatory Change Impact | Income Tax Adjustments | Change in Fair Market Value of Equity Securities | As Adjusted | | :------------------------------------------------------------------- | :---------- | :----------------------------- | :--------------------- | :----------------------------------------------- | :---------- | | Income from continuing operations attributable to Encompass Health (In Millions) | $181.3 | $2.9 | $0.4 | $0.4 | $185.0 | | Diluted earnings per share from continuing operations | $1.79 | $0.03 | — | — | $1.83 | [Adjusted EBITDA Reconciliations](index=10&type=section&id=Adjusted%20EBITDA%20Reconciliations) This section provides reconciliations for Adjusted EBITDA, detailing adjustments from both net cash provided by operating activities and net income for various periods [Net Cash Provided by Operating Activities to Adjusted EBITDA](index=10&type=section&id=Net%20Cash%20Provided%20by%20Operating%20Activities%20to%20Adjusted%20EBITDA) This reconciliation details the adjustments from net cash provided by operating activities to Adjusted EBITDA, including interest expense, equity in nonconsolidated affiliates, tax expenses, and changes in assets/liabilities Net Cash Provided by Operating Activities to Adjusted EBITDA Reconciliation | Metric | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :------------------------------------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net cash provided by operating activities (In Millions) | $217.4 | $206.7 | $456.2 | $434.6 | | Interest expense and amortization of debt discounts and fees (In Millions) | 34.3 | 36.3 | 69.5 | 72.7 | | Equity in net income of nonconsolidated affiliates (In Millions) | 1.4 | 0.9 | 2.1 | 1.3 | | Current portion of income tax expense (In Millions) | 40.6 | 36.5 | 72.4 | 64.4 | | Change in assets and liabilities (In Millions) | 11.8 | (3.5) | 13.4 | (41.4) | | Adjusted EBITDA (In Millions) | $271.8 | $249.6 | $544.8 | $478.6 | [Net Income to Adjusted EBITDA](index=15&type=section&id=Net%20Income%20to%20Adjusted%20EBITDA) This reconciliation shows the adjustments from net income to Adjusted EBITDA, accounting for discontinued operations, noncontrolling interests, income tax, interest, depreciation, and other non-operating items Net Income to Adjusted EBITDA Reconciliation | Metric | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :------------------------------------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income (In Millions) | $146.5 | $117.2 | $285.3 | $230.5 | | Loss from discontinued operations, net of tax, attributable to Encompass Health (In Millions) | 1.2 | 1.2 | 2.5 | 2.2 | | Provision for income tax expense (In Millions) | 38.3 | 32.8 | 76.6 | 64.7 | | Interest expense and amortization of debt discounts and fees (In Millions) | 34.3 | 36.3 | 69.5 | 72.7 | | Depreciation and amortization (In Millions) | 72.9 | 72.6 | 143.2 | 136.5 | | Adjusted EBITDA (In Millions) | $271.8 | $249.6 | $544.8 | $478.6 | [Adjusted Free Cash Flow Reconciliation](index=16&type=section&id=Adjusted%20Free%20Cash%20Flow%20Reconciliation) This section reconciles net cash provided by operating activities to adjusted free cash flow, factoring in capital expenditures for maintenance, distributions to noncontrolling interests, and transaction costs Adjusted Free Cash Flow Reconciliation | Metric | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :------------------------------------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net cash provided by operating activities (In Millions) | $217.4 | $206.7 | $456.2 | $434.6 | | Impact of discontinued operations (In Millions) | 2.0 | 1.6 | 2.7 | 2.9 | | Capital expenditures for maintenance (In Millions) | (48.9) | (56.7) | (87.6) | (94.5) | | Distributions paid to noncontrolling interests of consolidated affiliates (In Millions) | (27.8) | (27.6) | (52.5) | (59.4) | | Transaction costs and related liabilities (In Millions) | (0.2) | 0.2 | (8.7) | (0.7) | | Adjusted free cash flow (In Millions) | $142.5 | $124.2 | $310.1 | $282.9 | [Investing and Financing Activities Summary](index=16&type=section&id=Investing%20and%20Financing%20Activities%20Summary) This section provides a narrative summary of cash flows from investing and financing activities for the three and six months ended **June 30, 2024** and **2023**, highlighting capital expenditures, debt payments, dividends, and share repurchases - For the three months ended **June 30, 2024**, net cash used in investing activities was **$158.4 million**, primarily from capital expenditures[34](index=34&type=chunk) - Net cash used in financing activities during the three months ended **June 30, 2024**, was **$49.6 million**, primarily from distributions paid to noncontrolling interests, cash dividends paid on common stock, and repurchases of common stock, partially offset by contributions from noncontrolling interests[34](index=34&type=chunk) - For the six months ended **June 30, 2024**, net cash used in investing activities was **$288.1 million**, primarily from capital expenditures[35](index=35&type=chunk) - Net cash used in financing activities during the six months ended **June 30, 2024**, was **$90.2 million**, primarily from distributions paid to noncontrolling interests, cash dividends paid on common stock, and repurchases of common stock, partially offset by contributions from noncontrolling interests[35](index=35&type=chunk) [Forward-Looking Statements](index=17&type=section&id=Forward-Looking%20Statements) [Disclaimer and Risk Factors](index=17&type=section&id=Disclaimer%20and%20Risk%20Factors) This section serves as a comprehensive disclaimer, outlining that statements regarding future business, strategy, financial guidance, and other projections are forward-looking and subject to various risks and uncertainties that could cause actual results to differ materially - Statements regarding business, strategy, outlook, growth targets, guidance, dividend strategies, and financial plans are forward-looking statements[38](index=38&type=chunk) - All estimates, projections, and forward-looking information are based on current information, and Encompass Health undertakes no duty to publicly update or revise such information[38](index=38&type=chunk) - Actual events or results may differ materially due to a variety of factors, including infectious disease outbreaks, demand for services, legal proceedings, ability to attract and retain key personnel, information system disruptions, integration of acquisitions, changes in reimbursement, competitive pressures, labor costs, and general economic conditions[38](index=38&type=chunk)[39](index=39&type=chunk)

Core Insights - Encompass Health (EHC) is projected to report quarterly earnings of $1.01 per share, reflecting a 6.3% increase year-over-year, with revenues expected to reach $1.3 billion, a 9.9% increase from the previous year [1] Financial Metrics - Analysts forecast 'Revenues- Inpatient Rehabilitation' to be $1.28 billion, indicating a 9.8% increase from the same quarter last year [4] - The consensus estimate for 'Net patient revenue per discharge' is $20,927.01, up from $20,387 reported in the same quarter last year [5] - 'Revenues- Outpatient and other' are estimated at $31.45 million, reflecting a year-over-year increase of 26.8% [8] - The total discharges are expected to reach 60,955, compared to 57,011 in the same quarter of the previous year [9] Earnings Estimates - The consensus EPS estimate has been revised downward by 0.3% in the past 30 days, indicating a reassessment by analysts [6] - Changes in earnings estimates are crucial for predicting investor reactions and short-term stock performance [3] Market Performance - Encompass Health shares have returned +8.4% over the past month, contrasting with a -0.4% change in the Zacks S&P 500 composite [10]

To learn more, visit encompasshealth.com/locations/johnstonrehab. 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. Encompass Health (NYSE: EHC) is the largest owner and operator of rehabilitation hospita ...