Financial Performance - Net operating revenue increased by 94% to $14775 million in Q3 2025 compared to $13510 million in Q3 2024 [8] - Adjusted EBITDA increased by 114% to $3001 million in Q3 2025 compared to $2693 million in Q3 2024 [8] - Adjusted EPS increased by 194% to $123 in Q3 2025 compared to $103 in Q3 2024 [8] - Adjusted free cash flow decreased by 82% to $1742 million in Q3 2025 compared to $1897 million in Q3 2024 [8] - For the first 9 months of 2025 net operating revenue increased by 106% to $43906 million compared to $39682 million for the same period in 2024 [8] - For the first 9 months of 2025 adjusted EBITDA increased by 145% to $9323 million compared to $8141 million for the same period in 2024 [8] - For the first 9 months of 2025 adjusted EPS increased by 224% to $399 compared to $326 for the same period in 2024 [8] - For the first 9 months of 2025 adjusted free cash flow increased by 165% to $5825 million compared to $4998 million for the same period in 2024 [8] Capacity Additions and Development - The company opened three new hospitals in Q3 2025: a 50-bed de novo hospital in Daytona Beach FL a 40-bed de novo hospital in Danbury CT and a 50-bed satellite hospital in Wildwood FL [10] - The company added 39 beds to existing hospitals in Q3 2025 [10] Guidance - The updated 2025 net operating revenue guidance is $5905 million to $5955 million [22] - The updated 2025 adjusted EBITDA guidance is $1235 million to $1255 million [22] - The updated 2025 adjusted earnings per share guidance is $522 to $537 [22]

Financial Performance - Net operating revenue for Q3 2025 was $1,477.5 million, an increase of $126.5 million or 9.4% compared to Q3 2024[3] - Adjusted EBITDA for Q3 2025 reached $300.1 million, reflecting a growth of $30.8 million or 11.4% year-over-year[3] - The company reported adjusted earnings per share of $1.23 for Q3 2025, up 19.4% from $1.03 in Q3 2024[3] - Net income for Q3 2025 was $174.6 million, up from $147.1 million in Q3 2024, reflecting a growth of 18.5%[29] - Income from continuing operations attributable to Encompass Health for Q3 2025 was $126.9 million, compared to $108.9 million in Q3 2024, an increase of 16.5%[24][25] - Basic earnings per share for the three months ended September 30, 2025, was $1.26, compared to $1.09 for the same period in 2024, marking a rise of 15.6%[20] - For the nine months ended September 30, 2025, adjusted EBITDA was $932.3 million, compared to $814.1 million for the same period in 2024, an increase of 14.5%[26][27] Operational Highlights - Encompass Health opened three new hospitals during the quarter, increasing its capacity by 39 beds[4] - Discharges increased to 65,839 in Q3 2025, a growth of 5.0% compared to the previous year[3] - Net patient revenue per discharge rose to $21,679, marking a 3.3% increase from $20,987 in Q3 2024[3] - The company reported cash flows from operating activities of $270.8 million, a slight increase of 1.1% from $267.8 million in Q3 2024[3] Guidance and Future Outlook - The company increased its full-year 2025 guidance for net operating revenue to a range of $5,905 to $5,955 million[5] - Adjusted earnings per share guidance for 2025 was raised to a range of $5.22 to $5.37[5] - The company anticipates continued growth in patient volumes and revenues, despite potential risks from economic downturns and regulatory changes[35] Cash Flow and Investments - Cash flows from operating activities for the nine months ended September 30, 2025, totaled $829.6 million, compared to $724.0 million for the same period in 2024, an increase of 14.6%[18] - The company reported a net cash used in investing activities of $525.2 million for the nine months ended September 30, 2025, compared to $449.6 million for the same period in 2024, an increase of 16.8%[18] - Net cash used in financing activities during the nine months ended September 30, 2025, was $333.8 million, compared to $179.7 million in 2024, showing a significant increase of 85.5%[32][33] Balance Sheet and Equity - Total assets increased to $6,865.7 million as of September 30, 2025, up from $6,534.7 million on December 31, 2024, representing a growth of 5.06%[16] - Total shareholders' equity increased to $3,131.9 million as of September 30, 2025, up from $2,792.7 million on December 31, 2024, reflecting a growth of 12.1%[16] - Total current liabilities decreased to $762.0 million as of September 30, 2025, down from $841.0 million on December 31, 2024, a reduction of 9.4%[16] - Long-term debt, net of current portion, increased slightly to $2,393.9 million as of September 30, 2025, from $2,359.2 million on December 31, 2024, an increase of 1.5%[16] Cost Management and Strategic Focus - The company is actively managing costs, particularly in labor and employee benefits, to maintain profitability amid competitive pressures[35] - Encompass Health is focused on strategic acquisitions and investments to enhance its service offerings and market presence[35] Other Financial Metrics - The provision for income tax expense for Q3 2025 was $44.9 million, compared to $36.0 million in Q3 2024, indicating a rise of 24.7%[29] - Interest expense and amortization of debt discounts and fees for Q3 2025 was $30.8 million, down from $34.9 million in Q3 2024, a decrease of 12%[29] - Depreciation and amortization for Q3 2025 was $82.4 million, compared to $78.4 million in Q3 2024, an increase of 5.1%[29] - Adjusted free cash flow for the three months ended September 30, 2025, was $174.2 million, down from $189.7 million in 2024, representing a decrease of 7.3%[30]

Core Insights - Encompass Health Corporation reported strong financial results for Q3 2025, with net operating revenue increasing by 9.4% year-over-year to $1,477.5 million, and adjusted earnings per share rising by 19.4% to $1.23 [2][3] - The company has increased its full-year guidance for 2025, projecting net operating revenue between $5,905 million and $5,955 million, and adjusted EBITDA between $1,235 million and $1,255 million [4] Financial Performance - Net operating revenue for Q3 2025 was $1,477.5 million, compared to $1,351.0 million in Q3 2024, reflecting a $126.5 million increase [2] - Income from continuing operations attributable to Encompass Health per diluted share was $1.24, up from $1.07, marking a 15.9% increase [2] - Adjusted EBITDA for Q3 2025 was $300.1 million, an increase of 11.4% from $269.3 million in Q3 2024 [2] Operational Highlights - The company opened three new hospitals and added 39 beds to existing facilities during the quarter, enhancing its capacity to serve patients [3] - Encompass Health was recognized as "America's Most Awarded Leader in Inpatient Rehabilitation" for the sixth consecutive year, underscoring its commitment to high-quality patient care [3] Guidance Update - The updated full-year guidance for 2025 includes net operating revenue of $5,905 million to $5,955 million, adjusted EBITDA of $1,235 million to $1,255 million, and adjusted earnings per share from continuing operations of $5.22 to $5.37 [4]

Market Overview - U.S. equities reached record highs driven by optimism regarding trade negotiations between Washington and Beijing, with the Dow Jones Industrial Average increasing by 337.47 points (0.71%) to close at 47,544.59, the S&P 500 rising by 1.23% to 6,875.16, and the Nasdaq Composite leading the rally with a 1.86% jump to 23,637.46 [1] Interest Coverage Ratio Importance - The interest coverage ratio is crucial for assessing a company's ability to meet its debt obligations, with a higher ratio indicating better financial health [2][5] - This ratio is calculated as Earnings before Interest & Taxes (EBIT) divided by Interest Expense, providing insight into how many times a company can cover its interest payments from earnings [6][7] Company Analysis - Stride, Inc. (LRN), Ralph Lauren Corporation (RL), Encompass Health Corporation (EHC), and Boot Barn Holdings, Inc. (BOOT) are highlighted for their strong interest coverage ratios, indicating robust financial health [4][11] - Stride has a projected EPS growth of 8.8% and a stock price increase of 67.6% over the past year [14] - Ralph Lauren is projected to have a 21.7% EPS growth and a stock price increase of 65.8% over the past year [15] - Encompass Health is expected to see a 19% EPS growth with a stock price rise of 27.2% over the past year [16] - Boot Barn is projected to achieve a 12.9% EPS growth and a stock price increase of 56.2% over the past year [17] Investment Strategy - A successful investment strategy should include companies with an interest coverage ratio above the industry average, a favorable Zacks Rank, and a VGM Score of A or B [9][12] - Stocks with a strong historical EPS growth and substantial trading volume are also recommended for better investment outcomes [10][12]

Core Points - Encompass Health has opened its 25th rehabilitation hospital in Florida, specifically in St. Petersburg, to address the increasing demand for inpatient rehabilitation care [1][2][3] - The new facility spans 57,000 square feet and offers comprehensive rehabilitation services for patients recovering from various serious conditions, including strokes and spinal cord injuries [1][2] - The hospital features 50 private patient rooms, advanced rehabilitation technologies, and various amenities designed to enhance patient recovery and comfort [2][3] Company Overview - Encompass Health is the largest owner and operator of inpatient rehabilitation hospitals in the United States, with a total of 171 hospitals across 39 states and Puerto Rico [4] - The company has been recognized as America's Most Awarded Leader in Inpatient Rehabilitation for six consecutive years by Newsweek and Statista [4][8] - Encompass Health is also ranked among Fortune's World's Most Admired Companies and Forbes' Most Trusted Companies in America [4]

Core Viewpoint - Rosen Law Firm is investigating potential securities claims on behalf of shareholders of Encompass Health Corporation due to allegations of materially misleading business information issued to the investing public [1] Group 1 - The investigation is focused on potential securities claims related to Encompass Health Corporation [1] - Shareholders who purchased Encompass Health securities may be entitled to compensation without any out-of-pocket fees or costs [1]

Core Viewpoint - Bragar Eagel & Squire, P.C. is investigating potential claims against Encompass Health Corporation for possible violations of federal securities laws and unlawful business practices affecting stockholders [1][2]. Investigation Details - The investigation is prompted by allegations that Encompass's for-profit hospitals perform below average on key safety measures, as reported by The New York Times [6]. - Specific concerns include that Encompass owns facilities with significantly worse rates of potentially preventable readmissions, with 34 facilities rated poorly by Medicare [6]. Stock Impact - Following the publication of the allegations, Encompass's stock price dropped by $12.39, or 10.4%, closing at $107.28 per share on July 15, 2025, indicating a direct financial impact on investors [6].

Core Points - Encompass Health Corp. will report its third quarter results for the period ending September 30, 2025, after market close on October 29, 2025 [1] - An investor conference call is scheduled for October 30, 2025, at 10 a.m. ET to discuss the results [1] - The company is the largest owner and operator of inpatient rehabilitation hospitals in the U.S., with 170 hospitals across 39 states and Puerto Rico [3] Company Overview - Encompass Health provides high-quality rehabilitative care for patients recovering from major injuries or illnesses, utilizing advanced technology and innovative treatments [3] - The company has received accolades such as being named America's Most Awarded Leader in Inpatient Rehabilitation by Newsweek and Statista [3] - Encompass Health is recognized among Fortune's World's Most Admired Companies and Forbes' Most Trusted Companies in America [3]

Core Viewpoint - Encompass Health Corporation is facing scrutiny due to allegations of misleading business information, leading to a potential class action lawsuit by The Rosen Law Firm on behalf of shareholders [1][2][6] Group 1: Legal and Regulatory Issues - The Rosen Law Firm is investigating potential securities claims against Encompass Health following allegations of misleading business information [1][6] - A New York Times article reported serious incidents of patient harm and below-average safety performance at some of Encompass Health's rehab hospitals, resulting in a 10.3% drop in stock price on the day of publication [1] Group 2: Market Performance and Analyst Opinions - UBS upgraded Encompass Health's stock to a "Buy" on October 2, 2025, raising the price target from $140 to $150, indicating confidence in the company's future performance despite recent controversies [3][6] - Encompass Health's current stock price is $123.23, reflecting a slight decrease of 0.32, or -0.259% [4][6] - The stock has shown volatility over the past year, with a high of $127.86 and a low of $87.85 [4] Group 3: Financial Metrics - Encompass Health's market capitalization is approximately $12.41 billion, with a trading volume of 1,017,291 shares on the NYSE, indicating a significant market presence [5][6]

Core Insights - Encompass Health Corporation (EHC) is recognized as one of the best healthcare stocks to buy and hold for five years [1] Company Overview - Encompass Health Corporation is the largest owner and operator of inpatient rehabilitation hospitals in the U.S., with over 160 facilities across 38 states and Puerto Rico [2] - The company specializes in intensive rehabilitation for patients recovering from various conditions, offering personalized care plans that include physical, occupational, and speech therapies, along with 24-hour nursing and physician oversight [2] Recent Developments - In September 2025, EHC expanded its operations by opening two new hospitals: the Encompass Health Rehabilitation Hospital of Danbury in Connecticut, a 40-bed facility, and a 50-bed satellite hospital in Sumter County, Florida [3] - These expansions are part of EHC's growth strategy, which includes developing new hospitals and satellite locations to meet rising demand due to an aging population and increasing chronic conditions [4] Financial Performance - For the first half of 2025, EHC reported net operating revenue of $2.91 billion, reflecting an 11.3% year-over-year increase [5] - The company provided full-year revenue guidance of $5.88–$5.98 billion, with occupancy rates improving from 72.1% in 2023 to 77.7% in the first half of 2025, indicating stronger utilization and operational momentum [5]