Why Is Encompass Health (EHC) Up 3.8% Since Last Earnings Report?

Core Viewpoint - Encompass Health reported strong third-quarter earnings, with adjusted EPS beating estimates and significant year-over-year growth in revenues and income, indicating positive operational performance and growth potential in the healthcare sector [2][5][19]. Financial Performance - Adjusted EPS for Q3 was $1.03, exceeding the Zacks Consensus Estimate by 9.6% and reflecting a 19.8% increase year over year [2]. - Net operating revenues reached $1.4 billion, marking an 11.6% year-over-year improvement and surpassing consensus estimates by 1.7% [2]. - Net and comprehensive income rose 29.7% year over year to $147.1 million [5]. - Adjusted EBITDA grew 13.4% year over year to $269.3 million, exceeding estimates [6]. Operational Highlights - Total discharges increased by 8.8% year over year to 62.7 million, outperforming growth estimates [4]. - Net patient revenue per discharge rose 2.5% year over year, although it fell short of the 3.5% growth estimate [4]. - Total operating expenses were $1.14 billion, up 11.1% year over year, primarily due to increased salaries and benefits [4]. Financial Position - As of September 30, 2024, cash and cash equivalents stood at $147.8 million, more than doubling from the end of 2023 [7]. - Total assets increased by 5.8% to $6.5 billion, while long-term debt decreased by 12.8% to $2.7 billion [8]. - Total shareholders' equity improved by 18.4% to $2.7 billion [9]. Capital Deployment - The company repurchased shares worth $23.6 million in the first nine months of 2024, with a remaining buyback capacity of approximately $498 million [10]. - A quarterly cash dividend of 17 cents per share was paid [11]. 2024 Outlook - Net operating revenues are projected to be between $5.325 billion and $5.375 billion, reflecting an 11.4% increase from 2023 [13]. - Adjusted EBITDA is expected to range from $1.07 billion to $1.09 billion, indicating an 11.2% growth from the previous year [13]. - Adjusted EPS is anticipated to be between $4.19 and $4.33, representing a 17% rise from 2023 [14]. - The company plans to open six de novo hospitals and add approximately 110 beds to existing facilities in 2024 [15]. Growth Strategy - Encompass Health aims to inaugurate six to ten de novo hospitals annually and add 80-120 beds each year from 2023 to 2027, targeting a CAGR of 6-8% in discharges during this period [16]. Market Position - Encompass Health holds a Zacks Rank 2 (Buy), indicating expectations for above-average returns in the coming months [19].