Core Viewpoint - Encompass Health Corporation (EHC) is expanding its operations by planning to build a new 50-bed inpatient rehabilitation hospital in Apollo Beach, Florida, to enhance access to advanced rehabilitation services for patients recovering from serious medical conditions [1][2]. Company Expansion Plans - The new facility in Apollo Beach is part of EHC's broader growth strategy in high-demand markets, aiming to bring personalized rehabilitative care closer to patients and strengthen the brand's visibility in a growing community [2]. - EHC currently operates 167 hospitals across 38 states and Puerto Rico, with plans to open seven de novo hospitals and add 340 beds in 2025, along with a 50-bed satellite hospital [4]. - The company aims to inaugurate six to ten de novo hospitals each year from 2023 to 2027, with annual bed additions ranging from 80 to 120 [5]. Market Position and Performance - EHC's expansion reflects confidence in the profitability of entering underserved, high-growth regions, positioning the company to capture a larger share of the post-acute care market in Florida [3]. - Shares of Encompass Health have increased by 26.6% year-to-date, outperforming the industry growth of 4.2% [6]. - The company holds a Zacks Rank 1 (Strong Buy), indicating strong market confidence [7].

Core Points - Encompass Health is offering research-funding grants totaling up to $60,000 for studies on the impact or effectiveness of therapies in inpatient rehabilitation settings [1] - The application deadline for the grants is September 30, 2025, and recipients will be selected by October 30, 2025 [2] Grant Details - The grants are aimed at research in areas such as knowledge translation, implementation science, and the effectiveness of various therapies [1][7] - Applications will be evaluated based on scientific merit, experience of principal investigators, relevance to grant objectives, expected outcomes, and study feasibility [2] - Research must be completed within 12 months of receiving the grant and conducted in the United States or Puerto Rico [2] Company Overview - Encompass Health is the largest owner and operator of inpatient rehabilitation hospitals in the U.S., with 167 hospitals across 38 states and Puerto Rico [4] - The company is recognized for providing high-quality rehabilitative care and has received accolades from Fortune, Becker's Hospital Review, and Forbes [4]

Financial Data and Key Metrics Changes - The company reported a combined revenue increase of 8% in Q4 2024, with adjusted EBITDA growing by 4% from $111.8 million to $116 million [10] - For the full year, revenue from continuing operations grew by 7%, and adjusted EBITDA increased by 14%, reaching $510.4 million with a 9.8% adjusted EBITDA margin compared to 9.2% in 2023 [10][15] - The diluted loss per common share from continuing operations was $0.19 for Q4, compared to earnings of $0.12 in the same quarter last year [14] Business Line Data and Key Metrics Changes - The Critical Illness Recovery Hospital division saw a 6% increase in revenue and a 10% increase in adjusted EBITDA, with an adjusted EBITDA margin of 10.5% for Q4 [11] - The Inpatient Rehab Hospital division experienced a 13% revenue increase, but adjusted EBITDA declined by 6%, resulting in a margin of 21.2% [12] - The Outpatient Rehab division reported a 7% revenue increase and an 18% rise in adjusted EBITDA, with the adjusted EBITDA margin improving from 7.5% to 8.3% [13][14] Market Data and Key Metrics Changes - The company added 94 inpatient rehabilitation beds in Q4, with plans to add 481 additional beds in 2025 and 2026 [6][8] - The average daily census for the entire rehab division increased by 3%, while the occupancy rate was 81%, down from 85% in the prior year [12] Company Strategy and Development Direction - The company completed the spin-off of Concentra, focusing on its remaining three lines of business [3][4] - The company plans to open multiple new facilities, including a 45-bed rehab hospital in Temple, Texas, and a 63-bed rehab hospital in Ozark, Missouri, among others [7][8] - The company aims to optimize resources and serve targeted demographics through strategic closures and acquisitions in the outpatient division [9] Management Comments on Operating Environment and Future Outlook - Management noted that nursing agency rates have stabilized and utilization has returned to pre-COVID levels, with expectations for continued improvement in labor costs [11][17] - The company anticipates revenue for 2025 to be in the range of $5.4 billion to $5.6 billion, with adjusted EBITDA expected between $520 million and $540 million [22] - Management acknowledged confusion in the market regarding the impact of the Concentra spin-off on financial metrics [25][26] Other Important Information - The company refinanced $1.6 billion of outstanding debt, extending the maturity of its revolving credit facility to 2029 and increasing availability [4][5] - The company declared a cash dividend of $0.0625 per share payable on March 13, 2025 [16] Q&A Session Summary Question: Clarification on 2025 metrics - Analyst Justin Bowers inquired about revenue growth, EBITDA growth, and net leverage metrics for 2025, to which Martin Jackson confirmed the calculations and acknowledged market confusion regarding Concentra [25][26] Question: Development activity and startup costs - Bowers asked about the maturation of new facilities and associated startup costs, with Jackson indicating that the new beds would have a dampening effect on inpatient rehab margins for 2025 but expect significant growth in 2026 and 2027 [30][31] Question: Inpatient rehab margins and headwinds - Ben Hendrix questioned the lower margins in the inpatient rehab segment, with Robert Ortenzio explaining that hurricane impacts and startup losses contributed to the decrease [45][46] Question: 2025 outlook for IRF margins - Joanna Gajuk asked about the expected decline in IRF margins for 2025, with Jackson confirming that startup losses were the primary driver [50][51] Question: Outpatient rehab growth drivers - Gajuk also inquired about the expected growth in outpatient rehab EBITDA, with Jackson attributing it to increased rates from commercial contracts and improved clinical productivity [58][59]