BIRMINGHAM, Ala., and AMARILLO, Texas, Aug. 15, 2025 /PRNewswire/ -- Encompass Health Corp. (NYSE: EHC), the nation's largest owner and operator of inpatient rehabilitation hospitals, and BSA Health System, an affiliate of Ardent Health and the fourth largest employer in Amarillo, today announced a joint venture arrangement to own and operate a freestanding, 50-bed inpatient rehabilitation hospital in Amarillo, Texas. The hospital, currently under construction, will be located at 7950 Wallace Boulevard. BSA ...

Financial Data and Key Metrics Changes - Revenue for Q2 increased by 12% to $1.46 billion, while adjusted EBITDA rose by 17.2% to $318.6 million [13][7] - Total discharges for Q2 increased by 7.2%, with same-store discharges growing by 4.7% [7][13] - Net revenue per discharge increased by 4.2%, benefiting from a decrease in bad debt expense to 2% [13][14] - Adjusted free cash flow increased by 30.5% to approximately $186 million, bringing year-to-date adjusted free cash flow to approximately $408 million, a 31.7% increase from 2024 [15][16] Business Line Data and Key Metrics Changes - Neurological conditions and stroke discharges grew by 126.7% in Q2 [8] - The discharge community rate was 84.8%, with discharge to acute and SNF rates at 8.5% and 5.8% respectively, outperforming industry averages [8][11] - The company opened a new 60-bed hospital in Fort Myers, Florida, and added 26 beds to an existing hospital in Q2 [9] Market Data and Key Metrics Changes - The demand for inpatient rehabilitation services is significantly underserved, particularly as the U.S. population ages, with the Medicare beneficiary population projected to grow substantially [10] - The average age of Medicare beneficiaries is 77 years, with the population aged 65 and older growing at a CAGR of approximately 3% [10] Company Strategy and Development Direction - The company plans to open five additional hospitals and add 30 to 50 beds to existing hospitals by the end of the year [9] - The company is increasing its 2025 guidance for net operating revenue to between $5.88 billion and $5.98 billion, and adjusted EBITDA to between $1.22 billion and $1.25 billion [18] - The company continues to focus on treating complex medical conditions and developing best-in-class clinical protocols [11] Management's Comments on Operating Environment and Future Outlook - Management noted that the demand for inpatient rehabilitation services remains considerably underserved, with a focus on treating patients with complex medical conditions [10] - The company is optimistic about future growth, citing favorable demographic trends and an increase in Medicare reimbursement rates [12][10] Other Important Information - The company repurchased approximately 232,000 shares for $24.7 million and announced an increase in its quarterly dividend to $0.19 per share [17] - The company has a favorable leverage and liquidity position, with net leverage at two times and approximately $100 million in unrestricted cash [16] Q&A Session Summary Question: What are the occupancy rates and comfort levels for single bedroom facilities? - Management indicated that occupancy in Q2 was 76.6%, up 210 basis points year-over-year, and that stabilization above 80% would prompt consideration for future bed expansions [22][24] Question: What is the company's stance on quality ratings and initiatives? - Management stated that any changes in quality initiatives did not make it into the final rule and expressed willingness to support quality measurements that are agreed upon by the industry [27][28] Question: How does the company share quality results with stakeholders? - Management shares quality metrics such as discharge community rates and patient satisfaction scores with joint ventures and referring physicians [32][34] Question: What is the story behind the increase in managed care pricing assumptions? - The increase is attributed to growth in the VA Community Care Network, which now comprises almost 18% of the managed care business and pays at Medicare CMG rates [38] Question: What are the expectations for EBITDA in the second half of the year? - Management expects to incur most preopening and ramp-up costs in the second half, with guidance reflecting potential increases in bad debt and other costs [42] Question: How is the company addressing benefits expense growth? - Management noted that benefits expense per FTE increased by 18%, driven by high dollar medical claims, and indicated that strategies are in place to manage these costs [100] Question: What is the outlook for outpatient visits and pricing? - Outpatient visits increased by 8% quarter-over-quarter, attributed to a good book of business in remaining facilities, despite a reduction in the overall footprint [124]

Core Insights - Encompass Health Corporation (EHC) has opened a new 50-bed inpatient rehabilitation hospital in Daytona Beach, FL, marking its 169th hospital nationwide and 23rd in Florida, demonstrating the company's commitment to expanding access to rehabilitation care [1][8] Group 1: Hospital Features and Services - The Daytona Beach hospital provides specialized rehabilitation services for patients recovering from strokes, brain injuries, amputations, and orthopedic challenges, featuring private patient rooms, a therapy courtyard, an in-house dialysis suite, and dedicated areas for various therapies [2][8] - This facility represents a shift towards decentralized, patient-centered care in post-acute medicine, expected to enhance recovery outcomes and alleviate pressure on general hospitals in the area [3] Group 2: Growth Strategy - The new hospital is part of EHC's broader 2025 growth plan, which includes opening seven new hospitals this year and adding 100-120 beds to existing facilities, thereby strengthening its national presence [4] - EHC has announced plans to construct a freestanding inpatient rehabilitation hospital in North Las Vegas, NV, expected to begin operations by 2028 [4] Group 3: Market Performance - Year-to-date, EHC shares have increased by 16.2%, contrasting with a 1.5% decline in the industry [5]

Encompass Health (EHC) 2025 Conference Summary Company Overview - Encompass Health is the largest operator of inpatient rehabilitation facilities in the United States [1] Key Points and Arguments Volume Growth and Capacity - Encompass Health has a long-term target for discharge growth of 6% to 8% annually, with total discharge growth exceeding 6% for the last eleven quarters [6][8] - The company reported a first-quarter discharge growth of 10% in the previous year, influenced by an extra day due to leap year and the quarter ending on Easter Sunday [7] - In 2025, Encompass Health plans to open seven new hospitals, with five openings occurring after September, which will affect growth rates [8] - The expected breakdown for discharge growth is approximately two-thirds from same-store growth and one-third from new store growth [8] Occupancy Rates and Bed Expansion - The occupancy rate reached 78.8%, the highest ever recorded, reflecting a systematic increase in private room availability [10] - The percentage of private rooms in the portfolio increased from 40% in 2020 to 56% by the end of Q1 2025, enhancing occupancy levels [12] - Bed expansions are projected to yield high returns, with internal rates of return (IRR) exceeding 30% [13][14] - The company plans to add approximately 120 beds to existing hospitals in 2026 and 2027 [14] Joint Ventures and Market Strategy - Joint ventures (JVs) account for about 40% of Encompass Health's business, with a robust pipeline of potential partnerships [26] - JVs provide advantages such as faster ramp-up times and management fees, enhancing financial returns [27][28] - The company employs a data-driven approach to identify markets for new facilities, considering demographics, competition, and local healthcare needs [19] Medicare Advantage and Payer Mix - The Medicare Advantage payer mix has increased from under 9% in 2018 to approximately 30% in Q1 2025, with ongoing efforts to improve this further [35] - The reimbursement gap between Medicare Advantage and fee-for-service has narrowed from over 25% to less than 2% [36] - The conversion rate for Medicare Advantage referrals to admissions is currently about half that of fee-for-service, indicating significant growth potential [42] Regulatory Environment and Risks - Encompass Health does not foresee immediate risks from potential Medicare cuts, as IRFs represent less than 2% of overall Medicare expenditures [50] - The company is subject to frequent audits and maintains a low bad debt expense of around 2% [51] - There has been no recent discussion regarding the home health transfer policy, which had previously raised concerns [54] Cost Management and Financial Strategy - Construction costs for new facilities are approximately $1.2 million per bed, with bed expansions costing between $800,000 and $850,000 per bed [58] - The company has not observed upward pressure on construction or supply costs, benefiting from reduced demand among contractors [60] - Encompass Health repurchased $32 million of its stock in Q1 2025, indicating a commitment to returning value to shareholders while expanding capacity [64] Additional Important Insights - The aging demographic is a significant driver of growth, with projections indicating that one in five Americans will be over 65 by 2030 [17][18] - The company emphasizes its value proposition in treating complex medical conditions, which resonates with Medicare Advantage plans [40] - Encompass Health's strategic focus on expanding its capacity and improving payer mix positions it well for future growth opportunities [63]

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 Viewpoint - Encompass Health Corporation reported strong first-quarter results for 2025, with significant revenue and earnings growth, leading to an increase in full-year guidance for key financial metrics [1][4]. Financial Performance - Net operating revenue for Q1 2025 was $1,455.4 million, a 10.6% increase from $1,316.0 million in Q1 2024, reflecting a growth of $139.4 million [2][9]. - Income from continuing operations attributable to Encompass Health per diluted share rose to $1.48, up 33.3% from $1.11 in the previous year [2][14]. - Adjusted earnings per share increased by 22.3% to $1.37 from $1.12 [2][21]. - Cash flows from operating activities increased by 20.9% to $288.6 million compared to $238.8 million in Q1 2024 [2][18]. - Adjusted EBITDA for the quarter was $313.6 million, a 14.9% increase from $273.0 million [2][20]. Operational Highlights - Total discharges increased by 6.3% to 64,985, with same-store discharge growth of 4.4% [2][9]. - Net patient revenue per discharge grew by 3.9% to $21,816 from $20,990 [2][9]. - The company opened one new 40-bed hospital and added 25 beds to existing facilities during the quarter [3]. Updated Guidance - The company raised its full-year guidance for 2025, with net operating revenue now expected to be between $5,850 million and $5,925 million, up from the previous range of $5,800 million to $5,900 million [4]. - Adjusted EBITDA guidance was updated to a range of $1,185 million to $1,220 million, compared to the previous guidance of $1,160 million to $1,200 million [4]. - Adjusted earnings per share from continuing operations is now projected to be between $4.85 and $5.10, an increase from the prior range of $4.67 to $4.96 [4].