Encompass Health (US:EHC) ZACKSยท2025-03-14 14:21Core Viewpoint - Encompass Health Corporation (EHC) is well-positioned for growth due to strong revenue growth, continuous facility additions, and robust cash reserves, with a positive outlook for 2025 [1] Financial Performance - EHC has a strong earnings surprise history, outperforming estimates in the last four quarters with an average surprise of 13.65% [2] - Revenue for 2025 is projected to be between $5.8 billion and $5.9 billion, indicating an 8.9% increase from 2024 [3] - Adjusted EBITDA is expected to range from $1.16 billion to $1.2 billion, reflecting a 6.9% growth from 2024 [3] - Adjusted earnings per share from continuing operations are estimated to be between $4.67 and $4.96, representing an 8.7% growth from 2024 [4] Revenue Growth Drivers - EHC's revenues have been increasing since 2010, with 2024 benefiting from higher volumes in its Inpatient Rehabilitation unit [5] - The sustained demand for comprehensive rehabilitation services is expected to continue driving revenue growth [5] Expansion Initiatives - EHC is actively pursuing growth by opening new hospitals and adding beds to existing facilities, with plans for further expansion in 2025 [7] - In 2024, EHC opened seven hospitals and added 427 beds, with plans to open seven new hospitals and add 340 beds in 2025 [8] - The company aims to inaugurate six to ten new facilities each year from 2023 to 2027, along with annual bed additions of 80 to 120 [8] Financial Position - EHC has a strong financial position with cash reserves of $85.4 million and nearly $944 million available under its revolving credit facility as of December 31, 2024 [9] - The company generated solid cash flows from operations, with net cash from operating activities improving by 17.9% year-over-year in 2024 [9] - For 2025, adjusted free cash flow is anticipated to be between $590 million and $690 million [10]