On October 28, 2024, Encompass Health Corp (EHC, Financial) released its 8-K filing detailing the financial results for the third quarter of 2024. Encompass Health Corp, the largest owner and operator of inpatient rehabilitation hospitals in the United States, reported significant growth in revenue and earnings, exceeding analyst expectations.
Company Overview
Encompass Health Corp provides post-acute healthcare services through a network of inpatient rehabilitation hospitals across the United States. The company focuses on specialized rehabilitative treatment, primarily in the eastern half of the United States and Texas.
Financial Performance and Challenges
For the third quarter of 2024, Encompass Health Corp reported net operating revenue of $1,351.0 million, an 11.9% increase from $1,206.9 million in the same period last year. This growth was primarily driven by an 8.8% increase in discharges, including a 6.8% rise in same-store discharges. The net patient revenue per discharge also saw a 2.5% increase.
The company's income from continuing operations attributable to Encompass Health per diluted share was $1.07, surpassing the analyst estimate of $0.98. Adjusted earnings per share were reported at $1.03, reflecting a 19.8% increase from the previous year.
Key Financial Achievements
Encompass Health Corp's adjusted EBITDA rose by 13.4% to $269.3 million, primarily due to increased revenue. Cash flows provided by operating activities increased by 24.4% to $267.8 million, driven by higher net income despite higher cash tax payments. The adjusted free cash flow also saw a significant rise of 27.1% to $189.7 million.
Income Statement and Balance Sheet Highlights
| Metric | Q3 2024 | Q3 2023 | Change (%) |
|---|---|---|---|
| Net Operating Revenue | $1,351.0 million | $1,206.9 million | 11.9% |
| Income from Continuing Operations per Diluted Share | $1.07 | $0.85 | 25.9% |
| Adjusted Earnings per Share | $1.03 | $0.86 | 19.8% |
| Adjusted EBITDA | $269.3 million | $237.5 million | 13.4% |
Analysis and Future Outlook
Encompass Health Corp's strong performance in the third quarter is a testament to its effective management and operational strategies, especially in the face of challenges such as Hurricanes Helene and Milton. The company's ability to increase its full-year guidance reflects confidence in its continued growth trajectory.
“We are very pleased with our third quarter performance as strong discharge growth facilitated an increase of 11.9% in revenue and 13.4% in Adjusted EBITDA,” said President and Chief Executive Officer of Encompass Health Mark Tarr.
The updated full-year guidance projects net operating revenue between $5,325 to $5,375 million and adjusted earnings per share from continuing operations between $4.19 to $4.33, indicating a positive outlook for the remainder of the year.
Explore the complete 8-K earnings release (here) from Encompass Health Corp for further details.
