Core Insights - Encompass Health has been recognized as "America's Most Awarded Leader in Inpatient Rehabilitation" for the sixth consecutive year by Newsweek and Statista, with 66 hospitals included in the 2025 America's Best Physical Rehabilitation Centers list [1][2]. Group 1: Recognition and Rankings - The 2025 list features a record-breaking 320 inpatient physical rehabilitation centers, with Encompass Health having the most hospitals recognized [1]. - The ranking is based on quality metrics from the U.S. Centers for Medicare and Medicaid Services, expert survey results, accreditation data, and Google reviews [2]. Group 2: Commitment to Care - Encompass Health emphasizes its commitment to high-quality patient care and excellent outcomes, supported by decades of experience and clinical expertise [3]. - The hospitals provide essential rehabilitation services for various conditions, ensuring patients receive a minimum of three hours of therapy five days a week, along with 24-hour nursing care [3]. Group 3: Company Overview - Encompass Health is the largest owner and operator of inpatient rehabilitation hospitals in the U.S., with 170 hospitals across 39 states and Puerto Rico [4]. - The company is recognized as one of Fortune's World's Most Admired Companies and Forbes' Most Trusted Companies in America [4].

Core Insights - Encompass Health Corporation (EHC) has opened a new 50-bed inpatient rehabilitation hospital in Central Florida, specifically in The Villages, to cater to the healthcare needs of a rapidly growing retirement community [1][4] Group 1: Facility Features - The new hospital is equipped to support recovery from serious medical issues such as strokes, spinal cord injuries, brain injuries, amputations, and complex orthopedic conditions, providing at least three hours of therapy five days a week [2] - It includes an in-house pharmacy, a therapy gym with advanced technologies, an in-house dialysis suite, and outdoor therapy areas for realistic skill practice [3] Group 2: Strategic Growth Plans - EHC aims to enhance its network in Florida and is part of a broader growth plan that includes opening seven new hospitals and adding 100-120 beds to existing facilities by 2025 [4] Group 3: Financial Performance - EHC's occupancy rates have improved from 72.1% in 2023 to 74.6% in 2024, with an average of 77.7% in the first half of 2025 [5] - The company's net operating revenues increased by 11.3% year-over-year to $2.91 billion in the first half of 2025, with projections for 2025 revenues between $5.88 billion and $5.98 billion [5][8] Group 4: Stock Performance - Year-to-date, EHC shares have increased by 35.7%, outperforming the industry growth of 10.4% [6]

Financial Performance - Q2 2025 - Net operating revenue increased by 12.0% to $1,457.7 million compared to $1,301.2 million in Q2 2024[8] - Adjusted EBITDA increased by 17.2% to $318.6 million compared to $271.8 million in Q2 2024[8] - Adjusted EPS increased by 26.1% to $1.40 compared to $1.11 in Q2 2024[8] - Adjusted free cash flow increased by 30.5% to $185.9 million compared to $142.5 million in Q2 2024[8] Financial Performance - YTD Q2 2025 - Net operating revenue increased by 11.3% to $2,913.1 million compared to $2,617.2 million in YTD Q2 2024[8] - Adjusted EBITDA increased by 16.0% to $632.2 million compared to $544.8 million in YTD Q2 2024[8] - Adjusted EPS increased by 24.2% to $2.77 compared to $2.23 in YTD Q2 2024[8] - Adjusted free cash flow increased by 31.7% to $408.3 million compared to $310.1 million in YTD Q2 2024[8] Revenue Details - Inpatient revenue increased by 11.7% to $1,413.7 million in Q2 2025 compared to $1,265.5 million in Q2 2024[13] - Outpatient and other revenue increased by 23.2% to $44.0 million in Q2 2025 compared to $35.7 million in Q2 2024, including an $8.5 million increase in Medicaid supplemental payments[13] - Discharges increased by 7.2% to 65,237 in Q2 2025 compared to 60,833 in Q2 2024[13] 2025 Guidance (Updated) - Net Operating Revenue guidance increased to $5,880 to $5,980 million from the previous guidance of $5,850 to $5,925 million[22] - Adjusted EBITDA guidance increased to $1,220 to $1,250 million from the previous guidance of $1,185 to $1,220 million[22] - Adjusted earnings per share guidance increased to $5.12 to $5.34 from the previous guidance of $4.85 to $5.10[22]

Core Insights - Encompass Health Corporation (EHC) has inaugurated the Rehabilitation Hospital of Fort Myers in partnership with Lee Health, marking a significant expansion in Florida's healthcare landscape [1][5] - The new facility is equipped with 60 beds and offers advanced rehabilitation services, including tailored therapies for patients recovering from various conditions [3][4] - EHC's overall strategy includes increasing its facility count, which has reached 168 hospitals, contributing to a projected revenue growth of 9.6% in 2025 [7] Group 1: Facility and Services - The Rehabilitation Hospital of Fort Myers features modern amenities such as a therapy gym, dialysis unit, and private patient rooms, aimed at enhancing patient recovery [3] - Patients will receive at least three hours of intensive therapy five days a week, along with 24-hour nursing support, which is expected to improve health outcomes in the region [4] Group 2: Strategic Partnerships and Expansion - The partnership with Lee Health is part of EHC's strategy to strengthen its presence in Florida, with the Fort Myers hospital being its 22nd facility in the state [5] - EHC has plans for further expansion, including a new 50-bed rehabilitation hospital in Apollo Beach, FL [5] Group 3: Financial Performance - EHC reported a 10.6% year-over-year revenue increase in Q1 2025, with management estimating operating revenues between $5.85 billion and $5.925 billion for the year [7] - The company's share price has increased by 42.6% over the past year, significantly outperforming the industry average of 5.7% [8]

Financial Data and Key Metrics Changes - Revenue for Q1 2025 increased by 10.6% to $1.46 billion, while adjusted EBITDA rose by 14.9% to $313.6 million [16] - Total discharges grew by 6.3%, with same-store discharges increasing by 4.4% [8][16] - Net revenue per discharge increased by 3.9%, driven by a favorable payer mix [16][20] Business Line Data and Key Metrics Changes - The company reported a discharge community rate of 84%, with a discharge to acute rate of 8.9% and a discharge to skilled nursing facility (SNF) rate of 6.4% [9] - Annualized RN turnover decreased to 20.1% from 20.4%, and therapist turnover fell to 6.3% from 7.7% [10] Market Data and Key Metrics Changes - The demand for inpatient rehabilitation services remains strong, with plans to open six de novo hospitals and add 300 beds in 2025 [11][12] - The company anticipates adding approximately 120 beds to existing hospitals in both 2026 and 2027 due to strong volumes and occupancy levels [12] Company Strategy and Development Direction - The company is increasing its 2025 guidance based on strong Q1 results, with net operating revenue expected to be between $5.85 billion and $5.925 billion [20] - The company continues to invest in capacity additions to meet the growing demand for inpatient rehabilitation services, particularly as the U.S. population ages [12][13] Management's Comments on Operating Environment and Future Outlook - Management noted that the demand for services is not expected to fluctuate with economic conditions, as patients are nondiscretionary [95] - The company is closely monitoring the payer mix and does not anticipate the recent trends to become the new normal [25][121] Other Important Information - The company opened a new 40-bed joint venture hospital in Athens, Georgia, and plans to open additional facilities throughout the year [11] - The company has a strong pipeline of de novo projects, with 10 hospitals and 500 beds expected to open beyond 2025 [12] Q&A Session Summary Question: Inquiry about the increase in Medicare fee-for-service discharges - Management confirmed that the increase was not due to strategic actions but rather a surprising shift in payer mix, with Medicare fee-for-service growing faster than Medicare Advantage [24][25] Question: Discussion on employee metrics and hiring plans - Management stated that they remain committed to maintaining an employee per occupied bed (EPOB) ratio of 3.4 and are actively hiring to meet demand [30][32] Question: Concerns regarding supply costs and construction expenses - Management indicated that they do not foresee significant near-term risks related to construction costs or supply chain issues [40][41] Question: Clarification on Medicaid supplemental payments - Management noted that Medicaid supplemental payments are not a significant concern for the company compared to acute care hospitals [45] Question: Insights on labor efficiency and sustainability - Management expressed optimism about maintaining low contract labor levels and improving labor efficiency, although they cautioned that one quarter's performance does not establish a trend [51][52] Question: Discussion on capacity expansion and growth strategy - Management confirmed that they are accelerating their growth strategy through bed expansions and are focused on maintaining high-quality patient outcomes [62][64] Question: Inquiry about the impact of economic conditions on demand - Management reassured that demand for services remains stable regardless of economic fluctuations, as patients require care regardless of economic status [95]