Encompass Health (US:EHC)2025-10-29 20:22Financial 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]