Encompass Health Q4 Earnings Beat on Strong Discharge Growth

Core Viewpoint - Encompass Health Corporation (EHC) reported strong fourth-quarter results, with adjusted earnings per share (EPS) of $1.17, exceeding estimates and showing significant year-over-year growth [1][2]. Financial Performance - Net operating revenues reached$1.4 billion, reflecting a 12.8% increase year over year and surpassing consensus estimates by 2.1% [2][3]. - Net patient revenue per discharge increased by 4.2% year over year, beating estimates, while total discharges grew by 7.8% to 63,839, exceeding expectations [4]. - Adjusted EBITDA for the quarter was $289.6 million, a 13.6$1.17 billion, an 11% increase year over year, primarily due to higher salaries and benefits [4]. Year-End Financials - As of December 31, 2024, cash and cash equivalents stood at $85.4 million, a 23.6$6.5 billion, while long-term debt decreased by 12.2% to $2.4 billion [6][7]. - Total shareholders' equity improved by 23.8$2.8 billion, with net cash from operations reaching $1 billion, a 17.9$5.4 billion, up from $4.8 billion in 2023, with adjusted net income per share rising to$4.43 from $3.64 [8]. Capital Deployment - In 2024, the company repurchased shares worth$31.1 million and had approximately $489 million remaining under its buyback authorization [9]. 2025 Outlook - Net operating revenues for 2025 are projected to be between$5.8 billion and $5.9 billion, indicating an 8.9$4.67 to $4.96, suggesting an 8.7% rise from the previous year [11]. - The company plans to open seven new hospitals and add around 100 beds to existing facilities in 2025 [12]. Growth Targets - Management aims to open six to ten new hospitals annually and add 80-120 beds each year from 2023 to 2027, with a projected CAGR of 6-8% in discharges during this period [13].