Financial Data and Key Metrics Changes - Revenue increased by 12.7% in Q4 2024 compared to the previous year [10] - Adjusted EBITDA rose by 13.6%, while adjusted EPS increased by 23.2% [10] - Adjusted free cash flow surged by 103.7% to $190.5 million, with a full-year total of approximately $690 million, marking a 31.3% increase from 2023 [16] Business Line Data and Key Metrics Changes - Total discharge growth for Q4 was 7.8%, with same-store discharge growth at 5.8% [11] - Medicare Advantage discharge growth was up 14.7% for the quarter and 12% year-to-date, with a five-year CAGR of 11.6% [24] - Medicare fee-for-service discharges increased by 6.8% year-to-date, with same-store growth of 8.6% for 2024 [26] Market Data and Key Metrics Changes - The company continues to focus on the Medicare beneficiary population, which is projected to grow significantly by 2030 [11] - The company is experiencing broad-based volume growth across various patient mixes, payers, and geographies [10] Company Strategy and Development Direction - The company is prioritizing growth in Medicare Advantage and expanding its capacity through new hospital openings [24][28] - There is a focus on enhancing operational efficiencies and maintaining a favorable leverage ratio while deploying excess cash flow towards shareholder distributions [30][32] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in continued growth in Medicare Advantage and noted the importance of refining their value proposition to health plans [25] - The company is monitoring regulatory developments closely, particularly regarding Medicare Advantage and prior authorization processes [62] Other Important Information - The company anticipates an increase in capital expenditures by approximately $100 million, primarily for growth-related projects [28] - Adjusted EBITDA guidance for 2025 is projected between $1.16 billion and $1.20 billion, with net operating revenue expected to be between $5.8 billion and $5.9 billion [17] Q&A Session Summary Question: What is the growth trend in Medicare Advantage across different states? - Management indicated that growth is occurring in both existing and new markets, with significant upside potential in Medicare Advantage due to enrollment trends [24] Question: What are the priorities for free cash flow and capital expenditures? - The company plans to increase capital expenditures for growth-related projects and expects to utilize excess free cash flow for share repurchases and dividends [30] Question: How is the company addressing the pace of bed additions in 2025? - The company is adding one more hospital in 2025 compared to the previous year and is confident in meeting growth targets [35] Question: What are the expectations regarding group medical prescription drug costs? - Management noted that costs are expected to remain elevated through the first half of 2025, driven by increased utilization of high-cost specialty drugs [12][64] Question: How is the company managing construction costs and potential tariff impacts? - Construction costs are stabilizing, and the company does not foresee significant near-term risks from tariffs affecting their operations [100][105] Question: What is the company's stance on managed care contracting? - The company continues to negotiate favorable rates with managed care plans, maintaining a consistent spread between Medicare Advantage and traditional Medicare rates [120] Question: How is the company addressing misconceptions about IRF versus SNF care? - The company emphasizes education and outreach to discharge planners to clarify the differences in care intensity and patient outcomes between IRFs and SNFs [125][128]

Core Insights - Encompass Health (EHC) reported quarterly earnings of $1.17 per share, exceeding the Zacks Consensus Estimate of $1.02 per share, and showing an increase from $0.95 per share a year ago, resulting in an earnings surprise of 14.71% [1] - The company achieved revenues of $1.41 billion for the quarter ended December 2024, surpassing the Zacks Consensus Estimate by 2.05%, compared to $1.25 billion in the same quarter last year [2] - Encompass Health shares have increased approximately 10.7% since the beginning of the year, outperforming the S&P 500's gain of 3.1% [3] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $1.19 on revenues of $1.43 billion, and for the current fiscal year, it is $4.76 on revenues of $5.82 billion [7] - The estimate revisions trend for Encompass Health is currently unfavorable, leading to a Zacks Rank 4 (Sell) for the stock, indicating expected underperformance in the near future [6] Industry Context - The Medical - Outpatient and Home Healthcare industry, to which Encompass Health belongs, is currently in the top 34% of over 250 Zacks industries, suggesting a favorable industry outlook [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact investor decisions [5]

Financial Performance - Net operating revenue for Q4 2024 was $1,405.0 million, a 12.7% increase from $1,246.8 million in Q4 2023[2] - Income from continuing operations attributable to Encompass Health per diluted share increased by 25.5% to $1.18, compared to $0.94 in the same quarter last year[2] - Adjusted EBITDA rose by 13.6% to $289.6 million, driven primarily by increased revenue[3] - Net income for the year ended December 31, 2024, was $596.6 million, compared to $463.0 million in 2023, reflecting a year-over-year increase of 28.8%[19] - Adjusted EBITDA for the year ended December 31, 2024, reached $1,103.7 million, up from $971.1 million in 2023, indicating a growth of 13.6%[21] - Basic earnings per share for the year ended December 31, 2024, were $4.56, up from $3.63 in 2023, representing a growth of 25.7%[21] - Net income for Q4 2024 was $164.2 million, up from $119.1 million in Q4 2023, representing a 37.8% increase[31] - Adjusted EBITDA for Q4 2024 was $289.6 million, compared to $255.0 million in Q4 2023, representing a 13.5% increase[26][27] Cash Flow and Investments - Cash flows from operating activities increased by 38.7% to $278.8 million, attributed to higher net income and favorable changes in working capital[3] - Cash flows from operating activities totaled $1,002.8 million for the year ended December 31, 2024, compared to $850.8 million in 2023, marking an increase of 17.8%[19] - Net cash provided by operating activities for Q4 2024 was $278.8 million, an increase from $201.0 million in Q4 2023, marking a 38.6% rise[32] - Adjusted free cash flow for Q4 2024 was $190.5 million, significantly higher than $93.5 million in Q4 2023, indicating a 103.2% increase[32] - Net cash used in investing activities for the year ended December 31, 2024, was $653.3 million, compared to $602.8 million in 2023, reflecting an 8.4% increase[34][35] - Net cash used in financing activities for the year ended December 31, 2024, was $330.6 million, up from $197.2 million in 2023, representing a 67.5% increase[34][35] Operational Metrics - The company reported a total of 63,839 discharges in Q4 2024, reflecting a 7.8% growth compared to 59,247 discharges in Q4 2023[2] - The company achieved a same-store discharge growth of 5.8% in Q4 2024[2] - In 2024, the company increased its capacity by 427 beds through new hospitals and bed additions[4] Guidance and Future Outlook - For 2025, the company provided guidance for net operating revenue between $5,800 million and $5,900 million[6] - Adjusted EBITDA guidance for 2025 is projected to be between $1,160 million and $1,200 million[6] - Adjusted earnings per share from continuing operations is expected to be in the range of $4.67 to $4.96 for 2025[6] - The company plans to continue expanding its market presence and investing in new technologies to drive future growth[19] - The company anticipates continued growth in patient volumes and revenues, driven by strategic expansions and new service offerings[37] Balance Sheet Highlights - Total assets increased to $6,534.7 million as of December 31, 2024, up from $6,102.4 million in 2023, representing a growth of 7.1%[17] - Total current liabilities increased to $841.0 million as of December 31, 2024, from $656.4 million in 2023, a rise of 28.1%[17] - Long-term debt, net of current portion, decreased to $2,359.2 million as of December 31, 2024, from $2,687.8 million in 2023, a reduction of 12.2%[17] - The company reported a total shareholders' equity of $2,792.7 million as of December 31, 2024, up from $2,255.2 million in 2023, reflecting a growth of 23.8%[17] Other Financial Details - The company reported a loss on early extinguishment of debt of $0.6 million for the year ended December 31, 2024[28] - Stock-based compensation for the year 2024 was $48.3 million, compared to $50.6 million in 2023, showing a decrease of 4.5%[28][29] - The provision for income tax expense for the year 2024 was $150.2 million, compared to $132.2 million in 2023, an increase of 13.1%[28][29] - The company experienced a change in fair market value of equity securities, resulting in a gain of $1.0 million for the year ended December 31, 2024[28] - The company reported a loss from discontinued operations of $0.4 million in Q4 2024, compared to a gain of $8.5 million in Q4 2023[31] - Provision for income tax expense for the year ended December 31, 2024, was $150.2 million, compared to $132.2 million in 2023, indicating a 13.3% increase[31]

Core Viewpoint - Encompass Health Corporation reported strong financial results for Q4 2024, with significant growth in net operating revenue and adjusted EBITDA, driven by increased discharges and operational capacity expansion [2][3][12]. Financial Performance - Net operating revenue for Q4 2024 was $1,405.0 million, up from $1,246.8 million in Q4 2023, representing a growth of 12.7% [2][12]. - Income from continuing operations attributable to Encompass Health per diluted share increased to $1.18, a 25.5% rise from $0.94 in the previous year [2][12]. - Adjusted earnings per share rose to $1.17, reflecting a 23.2% increase from $0.95 [2][12]. - Cash flows from operating activities increased by 38.7% to $278.8 million compared to $201.0 million in Q4 2023 [2][12]. - Adjusted EBITDA for Q4 2024 was $289.6 million, a 13.6% increase from $255.0 million in Q4 2023 [2][12]. Operational Highlights - The company reported 63,839 discharges in Q4 2024, a 7.8% increase from 59,247 in Q4 2023, with same-store discharge growth of 5.8% [2][12]. - Net patient revenue per discharge increased by 4.2%, reaching $21,399 compared to $20,538 in the previous year [2][12]. - For the full year 2024, net operating revenue grew by 11.9% and adjusted EBITDA increased by 13.7% [3]. Capacity Expansion - In 2024, Encompass Health expanded its capacity by adding 427 beds through new hospitals and bed additions to existing facilities [3]. 2025 Guidance - The company provided guidance for 2025, projecting net operating revenue between $5,800 million and $5,900 million, and adjusted EBITDA between $1,160 million and $1,200 million [5]. - Adjusted earnings per share from continuing operations are expected to be in the range of $4.67 to $4.96 [5]. Company Overview - Encompass Health is the largest owner and operator of inpatient rehabilitation hospitals in the U.S., with 166 hospitals across 38 states and Puerto Rico [8]. - The company is recognized for providing high-quality rehabilitative care and has received accolades from Fortune and Forbes [8].

Core Points - Encompass Health Corp. has been named to Fortune's World's Most Admired Companies list for 2025, marking five consecutive years of recognition [1][2] - The recognition reflects the exceptional care provided by the company's clinicians and the trust built with patients, partners, and investors [2] - Encompass Health operates 166 hospitals across 38 states and Puerto Rico, focusing on high-quality rehabilitative care for patients recovering from major injuries or illnesses [4] Company Overview - Encompass Health is the largest owner and operator of inpatient rehabilitation hospitals in the United States [4] - The company utilizes advanced technology and innovative treatments to maximize patient recovery [4] - Encompass Health has received additional accolades, including being ranked among Becker's Hospital Review's 150 Top Places to Work in Healthcare and Forbes' Most Trusted Companies in America [4] Recognition Process - The World's Most Admired Companies list is determined through a survey conducted by Korn Ferry, which evaluates companies based on nine criteria including investment value, quality of management, and social responsibility [3] - The initial candidate list includes the 1,000 largest U.S. companies by revenue and non-U.S. companies with revenues of $10 billion or more, narrowing down to the top companies in each industry [2][3]

Core Insights - Analysts project Encompass Health (EHC) will report quarterly earnings of $1.02 per share, reflecting a year-over-year increase of 7.4% [1] - Revenue is expected to reach $1.38 billion, marking a 10.4% increase from the same quarter last year [1] - The consensus EPS estimate has been revised down by 0.3% in the past 30 days, indicating a reassessment by covering analysts [2] Earnings Estimates and Revisions - Revisions to earnings estimates are crucial indicators for predicting investor actions regarding the stock [3] - There is a strong correlation between earnings estimate revisions and short-term stock price performance [3] Key Metrics Projections - Analysts estimate 'Revenues- Inpatient Rehabilitation' will be $1.33 billion, a 9.6% increase year-over-year [5] - 'Revenues- Outpatient and other' are projected to reach $37.68 million, indicating a year-over-year change of 25.6% [5] - 'Net patient revenue per discharge' is expected to be $21,059.38, up from $20,538 in the previous year [5] - Total discharges are projected to reach 63,313, compared to 59,247 in the same quarter last year [6] Stock Performance - Encompass Health shares have increased by 10.5% in the past month, outperforming the Zacks S&P 500 composite's 1.7% increase [6] - Despite the recent performance, EHC holds a Zacks Rank 4 (Sell), suggesting expected underperformance relative to the overall market in the near term [6]

Company Overview - Encompass Health Corp. is the largest owner and operator of rehabilitation hospitals in the United States, with a national footprint of 166 hospitals across 38 states and Puerto Rico [3] - The company provides high-quality rehabilitative care for patients recovering from major injuries or illnesses, utilizing advanced technology and innovative treatments to maximize recovery [3] - Encompass Health has received recognition as one of Fortune's World's Most Admired Companies, Becker's Hospital Review's 150 Top Places to Work in Healthcare, and Forbes' Most Trusted Companies in America [3] Upcoming Financial Reporting - Encompass Health will report its fourth quarter results for the period ended December 31, 2024, after market close on February 6, 2025 [1] - An investor conference call is scheduled for February 7, 2025, at 10 a.m. ET to discuss the results [1] Conference Call Access - The conference call can be accessed by dialing 800-579-2543 for domestic callers and 785-424-1789 for international callers, using the conference ID EHCQ424 [2] - Participants are advised to call approximately 10 minutes before the start of the call to ensure connection [2] - A live webcast and online replay of the conference call will be available on the company's investor website [2]

Core Insights - Encompass Health Corp. has been recognized by Forbes as one of the Most Trusted Companies in America, ranking fourth in the Health Care Equipment and Services category [1][2]. Company Overview - Encompass Health is the largest owner and operator of rehabilitation hospitals in the United States, with a national presence that includes 166 hospitals across 38 states and Puerto Rico [4]. - The company focuses on providing high-quality, compassionate rehabilitative care for patients recovering from major injuries or illnesses, utilizing advanced technology and innovative treatments [4]. Recognition and Trust - Forbes evaluated over 2,000 large U.S.-based public companies based on customer trust, employee trust, investor trust, and media sentiment, analyzing hundreds of millions of data points [2]. - Only the top 300 companies made it to the Most Trusted Companies list, highlighting the competitive nature of this recognition [2]. Leadership Statement - The CEO of Encompass Health emphasized the company's commitment to building and maintaining trust with patients, partners, and investors, and expressed a focus on compassionate, individualized care to achieve optimal patient outcomes [3].

Encompass Health Corporation (EHC) benefits from growing patient volumes, an expanding inpatient rehabilitation network and a notable financial position. An optimistic business outlook for 2024 also reinforces investors’ confidence in the stock.EHC’s Zacks Rank & Upbeat Price PerformanceEncompass Health currently carries a Zacks Rank #2 (Buy).The stock has gained 40.3% in the past year compared with the industry’s 10.2% growth. The Zacks Medical sector has delined 4.1%, while the S&P 500 composite has risen ...

Investors interested in Medical - Outpatient and Home Healthcare stocks are likely familiar with Encompass Health (EHC) and Chemed (CHE) . But which of these two stocks offers value investors a better bang for their buck right now? We'll need to take a closer look.The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. The Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision t ...