Encompass Health (US:EHC) ZACKS·2025-04-28 16:00Core Viewpoint - Encompass Health Corporation (EHC) reported strong first-quarter 2025 results, with adjusted earnings per share (EPS) of $1.37, exceeding estimates and showing significant year-over-year growth [1][2] Financial Performance - Net operating revenues increased by 10.6% year over year to $1.5 billion, surpassing consensus estimates by 1.3% [2] - Net patient revenue per discharge grew by 3.9% year over year, with total discharges reaching 64,985, a 6.3% increase year over year [3] - Net and comprehensive income rose by 41.6% year over year to $196.5 million, while adjusted EBITDA improved by 14.9% year over year to $313.6 million, exceeding estimates [4] Operational Highlights - Total operating expenses increased by 7.2% year over year to $1.19 billion, driven by higher salaries and benefits [3] - The company added 25 beds to existing hospitals and opened one new de novo hospital during the quarter [4] Cash Flow and Capital Management - EHC generated $288.6 million in net cash from operations, a 20.9% increase year over year, with adjusted free cash flow soaring by 32.7% to $222.4 million [6] - The company repurchased shares worth $32.1 million and had approximately $458 million remaining under its buyback authorization [7] 2025 Outlook - The company updated its 2025 net operating revenue forecast to between $5.85 billion and $5.925 billion, indicating a 9.6% rise from 2024 [8] - Adjusted EBITDA is now estimated to be between $1.185 billion and $1.22 billion, reflecting a 9% growth from 2024 [9] - Adjusted EPS from continuing operations is expected to range from $4.85 to $5.10, suggesting a 12.3% increase from 2024 [9] Growth Strategy - EHC aims to open seven de novo hospitals and add 340 beds in 2025, with plans to add 100-120 beds to existing hospitals [10] - Over the 2023-2027 period, the company targets the inauguration of six to ten de novos each year and a compound annual growth rate (CAGR) of 6-8% in discharges [11]