Increases full-year guidance
BIRMINGHAM, Ala., Oct. 28,
2024 /PRNewswire/ -- Encompass Health Corporation
(NYSE: EHC), the largest owner and operator of inpatient
rehabilitation hospitals in the United
States, today reported its results of operations for the
third quarter ended September 30,
2024.
Summary results
|
|
|
|
|
Growth
|
|
Q3
2024
|
|
Q3
2023
|
|
Dollars
|
|
Percent
|
|
(In Millions, Except
Per Share Data)
|
|
Net operating
revenue
|
$ 1,351.0
|
|
$ 1,206.9
|
|
$ 144.1
|
|
11.9 %
|
|
Income from continuing
operations attributable to Encompass Health per diluted
share
|
1.07
|
|
0.85
|
|
0.22
|
|
25.9 %
|
|
Adjusted earnings per
share
|
1.03
|
|
0.86
|
|
0.17
|
|
19.8 %
|
|
Cash flows provided by
operating activities
|
267.8
|
|
215.2
|
|
52.6
|
|
24.4 %
|
|
Adjusted
EBITDA
|
269.3
|
|
237.5
|
|
31.8
|
|
13.4 %
|
|
Adjusted free cash
flow
|
189.7
|
|
149.3
|
|
40.4
|
|
27.1 %
|
|
|
|
|
|
|
|
|
|
(Actual
Amounts)
|
|
|
|
|
|
|
Discharges
|
62,715
|
|
57,665
|
|
|
|
8.8 %
|
|
Same-store
discharge growth
|
|
|
|
|
|
|
6.8 %
|
|
Net patient revenue per
discharge
|
$
20,987
|
|
$
20,472
|
|
|
|
2.5 %
|
See attached supplemental information for calculations of
non-GAAP measures and reconciliations to their most comparable GAAP
measure.
- Revenue growth of 11.9% resulted primarily from discharge
growth of 8.8%, including same-store growth of 6.8%. Net revenue
per discharge grew 2.5%.
- Cash flows provided by operating activities increased 24.4% to
$267.8 million, primarily due to an
increase in net income partly offset by higher cash tax
payments.
- Adjusted EBITDA increased 13.4%, primarily from increased
revenue.
"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.
"Our teams did an exemplary job managing through very
challenging conditions posed by Hurricanes Helene and Milton,
prioritizing patient safety and continuity of operations. We
thank our employees for their resilience and dedication to
providing the highest quality care for our patients."
2024 Guidance
The Company increased its full-year guidance as follows:
|
Full-Year 2024
Guidance
|
|
Previous
Guidance
|
|
Updated
Guidance
|
|
(In Millions, Except
Per Share Data)
|
|
Net operating
revenue
|
$5,275 to
$5,350
|
|
$5,325 to
$5,375
|
|
Adjusted
EBITDA
|
$1,040 to
$1,075
|
|
$1,070 to
$1,090
|
|
Adjusted earnings per
share from continuing operations attributable to Encompass
Health
|
$3.97 to
$4.22
|
|
$4.19 to
$4.33
|
For considerations regarding the Company's 2024 guidance, see
the supplemental information posted on the Company's website at
http://investor.encompasshealth.com. See also the "Other
information" section below for an explanation of why the Company
does not provide guidance for comparable GAAP measures for Adjusted
EBITDA and adjusted earnings per share.
Earnings conference call and webcast
The Company will host an investor conference call at
10:00 a.m. Eastern Time on Tuesday,
October 29, 2024 to discuss its results for the third quarter of
2024. For reference during the call, the Company will post certain
supplemental information at
http://investor.encompasshealth.com.
The conference call may be accessed by dialing 800 343-4849 and
giving the conference ID EHCQ324. International callers should dial
203 518-9848 and give the same conference ID. Please call
approximately ten minutes before the start of the call to ensure
you are connected. The conference call will also be webcast
live and will be available for on-line replay at
http://investor.encompasshealth.com by clicking on an available
link.
About Encompass Health
Encompass Health (NYSE: EHC) is the largest owner and operator
of inpatient rehabilitation hospitals in the United States. With a national footprint
that includes 165 hospitals in 38 states and Puerto Rico, the Company provides
high-quality, compassionate rehabilitative care for patients
recovering from a major injury or illness, using advanced
technology and innovative treatments to maximize recovery.
Encompass Health is ranked as one of Fortune's World's Most Admired
Companies and Becker's Hospital Review's 150 Top Places to Work in
Healthcare. For more information, visit encompasshealth.com, or
follow us on our newsroom, Twitter, Instagram and Facebook.
Other information
The information in this press release is summarized and should
be read in conjunction with the Company's Quarterly Report on Form
10-Q for the quarter ended September 30, 2024 (the
"September 2024 Form 10-Q"), when
filed, as well as the Company's Current Report on Form 8-K filed on
October 28, 2024 (the "Q3 Earnings Form 8-K"), to which this
press release is attached as Exhibit 99.1. In addition, the
Company will post supplemental information today on its website at
http://investor.encompasshealth.com for reference during its
October 29, 2024 earnings call.
The financial data contained in the press release and
supplemental information include non-GAAP financial measures,
including the Company's adjusted earnings per share, leverage
ratio, Adjusted EBITDA, and adjusted free cash flow.
Reconciliations to their most comparable GAAP measure, except with
regard to non-GAAP guidance, are included below or in the Q3
Earnings Form 8-K. Readers are encouraged to review the "Note
Regarding Presentation of Non-GAAP Financial Measures" included in
the Q3 Earnings Form 8-K which provides further explanation and
disclosure regarding the Company's use of these non-GAAP financial
measures.
Excluding net operating revenues, the Company does not provide
guidance on a GAAP basis because it is unable to predict, with
reasonable certainty, the future impact of items that are deemed to
be outside the control of the Company or otherwise not indicative
of its ongoing operating performance. Such items include
government, class action, and related settlements; professional
fees—accounting, tax, and legal; mark-to-market adjustments for
stock appreciation rights; gains or losses related to hedging
instruments; loss on early extinguishment of debt; adjustments to
its income tax provision (such as valuation allowance adjustments
and settlements of income tax claims); items related to corporate
and facility restructurings; and certain other items the Company
believes to be not indicative of its ongoing operations. These
items cannot be reasonably predicted and will depend on several
factors, including industry and market conditions, and could be
material to the Company's results computed in accordance with
GAAP.
However, the following reasonably estimable GAAP measures for
2024 would be included in a reconciliation for Adjusted EBITDA if
the other reconciling GAAP measures could be reasonably
predicted:
- Interest expense and amortization of debt discounts and fees -
approximately $140 million
- Amortization of debt-related items - approximately $10 million
The Q3 Earnings Form 8-K and, when filed, the September 2024 Form 10-Q can be found on the
Company's website at http://investor.encompasshealth.com and the
SEC's website at www.sec.gov.
|
Encompass Health Corporation and
Subsidiaries
Condensed Consolidated Statements of Comprehensive
Income
(Unaudited)
|
|
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
|
2024
|
|
2023
|
|
2024
|
|
2023
|
|
(In Millions, Except
Per Share Data)
|
|
Net operating
revenues
|
$
1,351.0
|
|
$
1,206.9
|
|
$
3,968.2
|
|
$
3,554.4
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
Salaries and
benefits
|
732.1
|
|
658.6
|
|
2,144.2
|
|
1,923.8
|
|
Other operating
expenses
|
202.4
|
|
183.7
|
|
596.2
|
|
534.3
|
|
Occupancy
costs
|
14.4
|
|
14.2
|
|
42.6
|
|
42.3
|
|
Supplies
|
60.6
|
|
53.9
|
|
176.7
|
|
159.7
|
|
General and
administrative expenses
|
54.0
|
|
49.8
|
|
154.7
|
|
148.6
|
|
Depreciation and
amortization
|
78.4
|
|
67.3
|
|
221.6
|
|
203.8
|
|
Total operating
expenses
|
1,141.9
|
|
1,027.5
|
|
3,336.0
|
|
3,012.5
|
|
Loss on early
extinguishment of debt
|
0.4
|
|
—
|
|
0.4
|
|
—
|
|
Interest expense and
amortization of debt discounts and fees
|
34.9
|
|
35.9
|
|
104.4
|
|
108.6
|
|
Other income
|
(9.3)
|
|
(0.5)
|
|
(18.0)
|
|
(6.8)
|
|
Equity in net income of
nonconsolidated affiliates
|
(0.7)
|
|
(1.0)
|
|
(2.8)
|
|
(2.3)
|
|
Income from continuing
operations before income tax expense
|
183.8
|
|
145.0
|
|
548.2
|
|
442.4
|
|
Provision for income
tax expense
|
36.0
|
|
30.3
|
|
112.6
|
|
95.0
|
|
Income from continuing
operations
|
147.8
|
|
114.7
|
|
435.6
|
|
347.4
|
|
Loss from discontinued
operations, net of tax
|
(0.7)
|
|
(1.3)
|
|
(3.2)
|
|
(3.5)
|
|
Net and
comprehensive income
|
147.1
|
|
113.4
|
|
432.4
|
|
343.9
|
|
Less: Net and
comprehensive income attributable to noncontrolling
interests
|
(38.9)
|
|
(28.1)
|
|
(97.6)
|
|
(79.5)
|
|
Net and
comprehensive income attributable to Encompass
Health
|
$ 108.2
|
|
$ 85.3
|
|
$ 334.8
|
|
$ 264.4
|
|
|
|
|
|
|
|
|
|
Weighted average
common shares outstanding:
|
|
|
|
|
|
|
|
|
Basic
|
99.9
|
|
99.5
|
|
99.9
|
|
99.5
|
|
Diluted
|
102.1
|
|
101.4
|
|
102.2
|
|
101.1
|
|
Earnings per common
share:
|
|
|
|
|
|
|
|
|
Basic earnings per
share attributable to Encompass Health common
shareholders:
|
|
|
|
|
|
|
|
|
Continuing
operations
|
$ 1.09
|
|
$ 0.86
|
|
$ 3.36
|
|
$ 2.68
|
|
Discontinued
operations
|
(0.01)
|
|
(0.01)
|
|
(0.03)
|
|
(0.04)
|
|
Net income
|
$ 1.08
|
|
$ 0.85
|
|
$ 3.33
|
|
$ 2.64
|
|
Diluted earnings
per share attributable to Encompass Health common
shareholders:
|
|
|
|
|
|
|
|
|
Continuing
operations
|
$ 1.07
|
|
$ 0.85
|
|
$ 3.31
|
|
$ 2.65
|
|
Discontinued
operations
|
(0.01)
|
|
(0.01)
|
|
(0.03)
|
|
(0.03)
|
|
Net income
|
$ 1.06
|
|
$ 0.84
|
|
$ 3.28
|
|
$ 2.62
|
|
|
|
|
|
|
|
|
|
Amounts
attributable to Encompass Health common
shareholders:
|
|
|
|
|
|
|
|
|
Income from continuing
operations
|
$ 108.9
|
|
$ 86.6
|
|
$ 338.0
|
|
$ 267.9
|
|
Loss from discontinued
operations, net of tax
|
(0.7)
|
|
(1.3)
|
|
(3.2)
|
|
(3.5)
|
|
Net income
attributable to Encompass Health
|
$ 108.2
|
|
$ 85.3
|
|
$ 334.8
|
|
$ 264.4
|
|
Encompass Health Corporation and
Subsidiaries
Condensed Consolidated Balance
Sheets
(Unaudited)
|
|
|
September 30,
2024
|
|
December 31,
2023
|
|
(In
Millions)
|
|
Assets
|
|
|
|
|
Current
assets:
|
|
|
|
|
Cash and cash
equivalents
|
$
147.8
|
|
$
69.1
|
|
Restricted
cash
|
51.1
|
|
35.1
|
|
Accounts
receivable
|
576.4
|
|
611.6
|
|
Other current
assets
|
158.6
|
|
126.0
|
|
Total current
assets
|
933.9
|
|
841.8
|
|
Property and equipment,
net
|
3,523.7
|
|
3,301.0
|
|
Operating lease
right-of-use assets
|
209.7
|
|
208.5
|
|
Goodwill
|
1,284.0
|
|
1,281.3
|
|
Intangible assets,
net
|
296.2
|
|
278.2
|
|
Other long-term
assets
|
210.9
|
|
191.6
|
|
Total
assets
|
$
6,458.4
|
|
$
6,102.4
|
|
Liabilities and
Shareholders' Equity
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
Current portion of
long-term debt
|
$
233.0
|
|
$
24.8
|
|
Current operating
lease liabilities
|
26.5
|
|
24.1
|
|
Accounts
payable
|
170.3
|
|
170.0
|
|
Accrued expenses and
other current liabilities
|
467.6
|
|
437.5
|
|
Total current
liabilities
|
897.4
|
|
656.4
|
|
Long-term debt, net of
current portion
|
2,344.5
|
|
2,687.8
|
|
Long-term operating
lease liabilities
|
195.5
|
|
196.1
|
|
Deferred income tax
liabilities
|
97.1
|
|
87.0
|
|
Other long-term
liabilities
|
198.3
|
|
177.9
|
|
Total
liabilities
|
3,732.8
|
|
3,805.2
|
|
Commitments and
contingencies
|
|
|
|
|
Redeemable
noncontrolling interests
|
56.5
|
|
42.0
|
|
Shareholders'
equity:
|
|
|
|
|
Encompass Health
shareholders' equity
|
1,959.8
|
|
1,647.5
|
|
Noncontrolling
interests
|
709.3
|
|
607.7
|
|
Total shareholders'
equity
|
2,669.1
|
|
2,255.2
|
|
Total liabilities
and shareholders' equity
|
$
6,458.4
|
|
$
6,102.4
|
|
Encompass Health Corporation and
Subsidiaries
Condensed Consolidated Statements of Cash
Flows
(Unaudited)
|
|
|
Nine Months
Ended
September 30,
|
|
2024
|
|
2023
|
|
(In
Millions)
|
|
Cash flows from
operating activities:
|
|
|
|
|
Net income
|
$
432.4
|
|
$
343.9
|
|
Loss from discontinued
operations, net of tax
|
3.2
|
|
3.5
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities—
|
|
|
|
|
Depreciation and
amortization
|
221.6
|
|
203.8
|
|
Stock-based
compensation
|
35.8
|
|
37.2
|
|
Deferred tax expense
(benefit)
|
2.1
|
|
(2.9)
|
|
Other, net
|
13.5
|
|
10.0
|
|
Change in assets and
liabilities, net of acquisitions—
|
|
|
|
|
Accounts
receivable
|
29.1
|
|
20.7
|
|
Other
assets
|
(43.3)
|
|
(4.1)
|
|
Accounts
payable
|
1.4
|
|
(0.2)
|
|
Accrued
payroll
|
(2.6)
|
|
24.1
|
|
Accrued interest
payable
|
(19.2)
|
|
(19.1)
|
|
Other
liabilities
|
53.7
|
|
37.5
|
|
Net cash used in
operating activities of discontinued operations
|
(3.7)
|
|
(4.6)
|
|
Total
adjustments
|
288.4
|
|
302.4
|
|
Net cash provided
by operating activities
|
724.0
|
|
649.8
|
|
Cash flows from
investing activities:
|
|
|
|
|
Purchases of property,
equipment, and intangible assets
|
(443.8)
|
|
(371.4)
|
|
Purchase of restricted
investments
|
(20.0)
|
|
(21.1)
|
|
Proceeds from sale of
restricted investments
|
17.9
|
|
7.0
|
|
Other, net
|
(3.7)
|
|
(9.2)
|
|
Net cash used in
investing activities
|
(449.6)
|
|
(394.7)
|
|
Cash flows from
financing activities:
|
|
|
|
|
Principal borrowings
on notes
|
15.0
|
|
20.0
|
|
Principal payments on
debt, including pre-payments
|
(153.4)
|
|
(6.3)
|
|
Borrowings on
revolving credit facility
|
50.0
|
|
60.0
|
|
Payments on revolving
credit facility
|
(50.0)
|
|
(115.0)
|
|
Principal payments
under finance lease obligations
|
(16.2)
|
|
(35.9)
|
|
Taxes paid on behalf
of employees for shares withheld
|
(12.1)
|
|
(8.1)
|
|
Contributions from
noncontrolling interests of consolidated affiliates
|
139.7
|
|
54.7
|
|
Dividends paid on
common stock
|
(45.8)
|
|
(45.5)
|
|
Distributions paid to
noncontrolling interests of consolidated affiliates
|
(85.5)
|
|
(91.9)
|
|
Repurchases of common
stock, including fees and expenses
|
(23.6)
|
|
—
|
|
Other, net
|
2.2
|
|
0.7
|
|
Net cash used in
financing activities
|
(179.7)
|
|
(167.3)
|
|
Increase in cash,
cash equivalents, and restricted cash
|
94.7
|
|
87.8
|
|
Cash, cash
equivalents, and restricted cash at beginning of
period
|
104.2
|
|
53.4
|
|
Cash, cash
equivalents, and restricted cash at end of period
|
$
198.9
|
|
$
141.2
|
|
|
|
|
|
Nine Months
Ended
September 30,
|
|
2024
|
|
2023
|
|
(In
Millions)
|
|
Reconciliation of
Cash, Cash Equivalents, and Restricted Cash
|
|
|
|
|
Cash and cash
equivalents at beginning of period
|
$
69.1
|
|
$
21.8
|
|
Restricted cash at
beginning of period
|
35.1
|
|
31.6
|
|
Cash, cash
equivalents, and restricted cash at beginning of period
|
$
104.2
|
|
$
53.4
|
|
|
|
|
|
Cash and cash
equivalents at end of period
|
$
147.8
|
|
$
99.7
|
|
Restricted cash at end
of period
|
51.1
|
|
41.5
|
|
Cash, cash
equivalents, and restricted cash at end of period
|
$
198.9
|
|
$
141.2
|
|
Encompass Health Corporation and
Subsidiaries
Supplemental Information
Earnings Per Share
|
|
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
|
2024
|
|
2023
|
|
2024
|
|
2023
|
|
(In Millions, Except
Per Share Data)
|
|
Adjusted
EBITDA
|
$ 269.3
|
|
$ 237.5
|
|
$ 814.1
|
|
$ 716.1
|
|
Depreciation and
amortization
|
(78.4)
|
|
(67.3)
|
|
(221.6)
|
|
(203.8)
|
|
Interest expense and
amortization of debt discounts and fees
|
(34.9)
|
|
(35.9)
|
|
(104.4)
|
|
(108.6)
|
|
Stock-based
compensation
|
(12.9)
|
|
(13.7)
|
|
(35.8)
|
|
(37.2)
|
|
Loss on disposal or
impairment of assets
|
(0.6)
|
|
(2.2)
|
|
(11.3)
|
|
(3.7)
|
|
142.5
|
|
118.4
|
|
441.0
|
|
362.8
|
|
Items not indicative of
ongoing operating performance:
|
|
|
|
|
|
|
|
|
Loss on early
extinguishment of debt
|
(0.4)
|
|
—
|
|
(0.4)
|
|
—
|
|
State regulatory
change impact on noncontrolling interests
|
—
|
|
—
|
|
—
|
|
2.2
|
|
Change in fair market
value of equity securities
|
2.8
|
|
(1.5)
|
|
2.7
|
|
(2.1)
|
|
Asset impairment
impact on noncontrolling interests
|
—
|
|
—
|
|
7.3
|
|
—
|
|
Pre-tax
income
|
144.9
|
|
116.9
|
|
450.6
|
|
362.9
|
|
Income tax
expense
|
(36.0)
|
|
(30.3)
|
|
(112.6)
|
|
(95.0)
|
|
Income from
continuing operations (1)
|
$ 108.9
|
|
$ 86.6
|
|
$ 338.0
|
|
$ 267.9
|
|
|
|
|
|
|
|
|
|
Basic shares
|
99.9
|
|
99.5
|
|
99.9
|
|
99.5
|
|
Diluted
shares
|
102.1
|
|
101.4
|
|
102.2
|
|
101.1
|
|
|
|
|
|
|
|
|
|
Basic earnings per
share (1)
|
$ 1.09
|
|
$ 0.86
|
|
$ 3.36
|
|
$ 2.68
|
|
Diluted earnings per
share (1)
|
$ 1.07
|
|
$ 0.85
|
|
$ 3.31
|
|
$ 2.65
|
|
|
(1)
Income from continuing operations attributable to Encompass
Health
|
|
Encompass Health Corporation and
Subsidiaries
Supplemental Information
Adjusted Earnings Per Share
|
|
|
Q3
|
|
9
Months
|
|
2024
|
|
2023
|
|
2024
|
|
2023
|
|
|
|
|
|
|
|
|
|
Earnings per share,
as reported
|
$
1.07
|
|
$
0.85
|
|
$
3.31
|
|
$
2.65
|
|
Adjustments, net of
tax:
|
|
|
|
|
|
|
|
|
Asset impairment
impact
|
—
|
|
—
|
|
0.02
|
|
—
|
|
Income tax
adjustments
|
(0.02)
|
|
—
|
|
(0.05)
|
|
—
|
|
State regulatory
change impact
|
—
|
|
—
|
|
—
|
|
0.03
|
|
Change in fair market
value of equity securities
|
(0.02)
|
|
0.01
|
|
(0.02)
|
|
0.02
|
|
Adjusted earnings
per share*
|
$
1.03
|
|
$
0.86
|
|
$
3.26
|
|
$
2.69
|
|
|
* Adjusted EPS
may not sum due to rounding.
|
|
Encompass Health Corporation and
Subsidiaries
Supplemental Information
Reconciliation of Net Cash Provided by Operating
Activities to Adjusted EBITDA
|
|
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
|
2024
|
|
2023
|
|
2024
|
|
2023
|
|
(In
Millions)
|
|
Net cash provided by
operating activities
|
$ 267.8
|
|
$ 215.2
|
|
$ 724.0
|
|
$ 649.8
|
|
Interest expense and
amortization of debt discounts and fees
|
34.9
|
|
35.9
|
|
104.4
|
|
108.6
|
|
Gain (loss) on sale of
investments, excluding impairments
|
4.6
|
|
(2.7)
|
|
5.8
|
|
(0.9)
|
|
Equity in net income of
nonconsolidated affiliates
|
0.7
|
|
1.0
|
|
2.8
|
|
2.3
|
|
Net income attributable
to noncontrolling interests in continuing operations
|
(38.9)
|
|
(28.1)
|
|
(97.6)
|
|
(79.5)
|
|
Amortization of
debt-related items
|
(2.4)
|
|
(2.4)
|
|
(7.3)
|
|
(7.1)
|
|
Distributions from
nonconsolidated affiliates
|
(1.1)
|
|
(0.4)
|
|
(3.1)
|
|
(0.6)
|
|
Current portion of
income tax expense
|
38.1
|
|
33.5
|
|
110.5
|
|
97.9
|
|
Change in assets and
liabilities
|
(32.5)
|
|
(17.5)
|
|
(19.1)
|
|
(58.9)
|
|
Cash used in operating
activities of discontinued operations
|
1.0
|
|
1.7
|
|
3.7
|
|
4.6
|
|
State regulatory change
impact on noncontrolling interests
|
—
|
|
—
|
|
—
|
|
(2.2)
|
|
Asset impairment impact
on noncontrolling interests
|
—
|
|
—
|
|
(7.3)
|
|
—
|
|
Change in fair market
value of equity securities
|
(2.8)
|
|
1.5
|
|
(2.7)
|
|
2.1
|
|
Other
|
(0.1)
|
|
(0.2)
|
|
—
|
|
—
|
|
Adjusted
EBITDA
|
$ 269.3
|
|
$ 237.5
|
|
$ 814.1
|
|
$ 716.1
|
|
Encompass Health Corporation and
Subsidiaries
Supplemental Information
Reconciliation of Income from Continuing Operations
Attributable to Encompass Health per Diluted Share to Adjusted
Earnings Per Share
|
|
|
For the Three Months
Ended September 30, 2024
|
|
|
|
Adjustments
|
|
|
|
As
Reported
|
|
Loss on Early
Extinguishment
of Debt
|
|
Income Tax
Adjustments
|
|
Change in Fair
Market Value
of Equity
Securities
|
|
As
Adjusted
|
|
(In Millions, Except
Per Share Amounts)
|
|
Adjusted
EBITDA*
|
$
269.3
|
|
$
—
|
|
$
—
|
|
$
—
|
|
$ 269.3
|
|
Depreciation and
amortization
|
(78.4)
|
|
—
|
|
—
|
|
—
|
|
(78.4)
|
|
Interest expense and
amortization of debt discounts and fees
|
(34.9)
|
|
—
|
|
—
|
|
—
|
|
(34.9)
|
|
Stock-based
compensation
|
(12.9)
|
|
—
|
|
—
|
|
—
|
|
(12.9)
|
|
Loss on disposal or
impairment of assets
|
(0.6)
|
|
—
|
|
—
|
|
—
|
|
(0.6)
|
|
Loss on early
extinguishment of debt
|
(0.4)
|
|
0.4
|
|
—
|
|
—
|
|
—
|
|
Change in fair market
value of equity securities
|
2.8
|
|
—
|
|
—
|
|
(2.8)
|
|
—
|
|
Income from
continuing operations before income tax expense
|
144.9
|
|
0.4
|
|
—
|
|
(2.8)
|
|
142.5
|
|
Provision for income
tax expense
|
(36.0)
|
|
(0.1)
|
|
(2.1)
|
|
0.7
|
|
(37.5)
|
|
Income from
continuing operations attributable to Encompass
Health
|
$
108.9
|
|
$
0.3
|
|
$
(2.1)
|
|
$
(2.1)
|
|
$ 105.0
|
|
Diluted earnings per
share from continuing operations**
|
$
1.07
|
|
$
—
|
|
$
(0.02)
|
|
$
(0.02)
|
|
$
1.03
|
|
Diluted shares used
in calculation
|
102.1
|
|
|
|
|
|
|
|
|
|
|
* See
reconciliation of net income to Adjusted EBITDA.
|
|
** Adjusted EPS may not
sum across due to rounding.
|
|
Encompass Health Corporation and
Subsidiaries
Supplemental Information
Reconciliation of Income from Continuing Operations
Attributable to Encompass Health per Diluted Share to Adjusted
Earnings Per Share
|
|
|
For the Three Months
Ended September 30, 2023
|
|
|
|
Adjustments
|
|
|
|
As
Reported
|
|
Income Tax
Adjustments
|
|
Change in Fair
Market Value of
Equity Securities
|
|
As
Adjusted
|
|
(In Millions, Except
Per Share Amounts)
|
|
Adjusted
EBITDA*
|
$
237.5
|
|
$
—
|
|
$
—
|
|
$ 237.5
|
|
Depreciation and
amortization
|
(67.3)
|
|
—
|
|
—
|
|
(67.3)
|
|
Interest expense and
amortization of debt discounts and fees
|
(35.9)
|
|
—
|
|
—
|
|
(35.9)
|
|
Stock-based
compensation
|
(13.7)
|
|
—
|
|
—
|
|
(13.7)
|
|
Loss on disposal or
impairment of assets
|
(2.2)
|
|
—
|
|
—
|
|
(2.2)
|
|
Change in fair market
value of equity securities
|
(1.5)
|
|
—
|
|
1.5
|
|
—
|
|
Income from
continuing operations before income tax expense
|
116.9
|
|
—
|
|
1.5
|
|
118.4
|
|
Provision for income
tax expense
|
(30.3)
|
|
(0.5)
|
|
(0.3)
|
|
(31.1)
|
|
Income from
continuing operations attributable to Encompass
Health
|
$
86.6
|
|
$
(0.5)
|
|
$
1.2
|
|
$
87.3
|
|
Diluted earnings per
share from continuing operations**
|
$
0.85
|
|
$
—
|
|
$
0.01
|
|
$
0.86
|
|
Diluted shares used
in calculation
|
101.4
|
|
|
|
|
|
|
|
|
* See
reconciliation of net income to Adjusted EBITDA.
|
|
** Adjusted EPS may not
sum across due to rounding.
|
|
Encompass Health Corporation and
Subsidiaries
Supplemental Information
Reconciliation of Income from Continuing Operations
Attributable to Encompass Health per Diluted Share to Adjusted
Earnings Per Share
|
|
|
For the Nine Months
Ended September 30, 2024
|
|
|
|
Adjustments
|
|
|
|
As
Reported
|
|
Asset
Impairment
Impact
|
|
Loss on Early
Extinguishment
of Debt
|
|
Income Tax
Adjustments
|
|
Change in Fair
Market Value of
Equity Securities
|
|
As
Adjusted
|
|
(In Millions, Except
Per Share Amounts)
|
|
Adjusted
EBITDA*
|
$
814.1
|
|
$
—
|
|
$
—
|
|
$
—
|
|
$
—
|
|
$ 814.1
|
|
Depreciation and
amortization
|
(221.6)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(221.6)
|
|
Interest expense and
amortization of debt discounts and fees
|
(104.4)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(104.4)
|
|
Stock-based
compensation
|
(35.8)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(35.8)
|
|
Loss on disposal or
impairment of assets
|
(11.3)
|
|
10.4
|
|
—
|
|
—
|
|
—
|
|
(0.9)
|
|
Loss on early
extinguishment of debt
|
(0.4)
|
|
—
|
|
0.4
|
|
—
|
|
—
|
|
—
|
|
Change in fair market
value of equity securities
|
2.7
|
|
—
|
|
—
|
|
—
|
|
(2.7)
|
|
—
|
|
Asset impairment impact
on noncontrolling interests
|
7.3
|
|
(7.3)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Income from
continuing operations before income tax expense
|
450.6
|
|
3.1
|
|
0.4
|
|
—
|
|
(2.7)
|
|
451.4
|
|
Provision for income
tax expense
|
(112.6)
|
|
(1.3)
|
|
(0.1)
|
|
(5.1)
|
|
0.7
|
|
(118.4)
|
|
Income from
continuing operations attributable to Encompass
Health
|
$
338.0
|
|
$
1.8
|
|
$
0.3
|
|
$
(5.1)
|
|
$
(2.0)
|
|
$ 333.0
|
|
Diluted earnings per
share from continuing operations**
|
$
3.31
|
|
$
0.02
|
|
$
—
|
|
$
(0.05)
|
|
$
(0.02)
|
|
$
3.26
|
|
Diluted shares used
in calculation
|
102.2
|
|
|
|
|
|
|
|
|
|
|
|
|
* See
reconciliation of net income to Adjusted EBITDA.
|
|
** Adjusted EPS may not
sum across due to rounding.
|
|
Encompass Health Corporation and
Subsidiaries
Supplemental Information
Reconciliation of Income from Continuing Operations
Attributable to Encompass Health per Diluted Share to Adjusted
Earnings Per Share
|
|
|
For the Nine Months
Ended September 30, 2023
|
|
|
|
Adjustments
|
|
|
|
As
Reported
|
|
State
Regulatory
Change
Impact
|
|
Income Tax
Adjustments
|
|
Change in
Fair Market
Value of
Equity
Securities
|
|
As
Adjusted
|
|
(In Millions, Except
Per Share Amounts)
|
|
Adjusted
EBITDA*
|
$
716.1
|
|
$
—
|
|
$
—
|
|
$
—
|
|
$ 716.1
|
|
Depreciation and
amortization
|
(203.8)
|
|
6.1
|
|
—
|
|
—
|
|
(197.7)
|
|
Interest expense and
amortization of debt discounts and fees
|
(108.6)
|
|
—
|
|
—
|
|
—
|
|
(108.6)
|
|
Stock-based
compensation
|
(37.2)
|
|
—
|
|
—
|
|
—
|
|
(37.2)
|
|
Loss on disposal or
impairment of assets
|
(3.7)
|
|
—
|
|
—
|
|
—
|
|
(3.7)
|
|
State regulatory change
impact on noncontrolling interests
|
2.2
|
|
(2.2)
|
|
—
|
|
—
|
|
—
|
|
Change in fair market
value of equity securities
|
(2.1)
|
|
—
|
|
—
|
|
2.1
|
|
—
|
|
Income from
continuing operations before income tax expense
|
362.9
|
|
3.9
|
|
—
|
|
2.1
|
|
368.9
|
|
Provision for income
tax expense
|
(95.0)
|
|
(1.0)
|
|
(0.1)
|
|
(0.5)
|
|
(96.6)
|
|
Income from
continuing operations attributable to Encompass
Health
|
$
267.9
|
|
$
2.9
|
|
$
(0.1)
|
|
$
1.6
|
|
$ 272.3
|
|
Diluted earnings per
share from continuing operations**
|
$
2.65
|
|
$
0.03
|
|
$
—
|
|
$
0.02
|
|
$
2.69
|
|
Diluted shares used
in calculation
|
101.1
|
|
|
|
|
|
|
|
|
|
|
* See
reconciliation of net income to Adjusted EBITDA.
|
|
** Adjusted EPS may not
sum across due to rounding.
|
|
Encompass Health Corporation and
Subsidiaries
Supplemental Information
Reconciliation of Net Income to Adjusted
EBITDA
|
|
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
|
2024
|
|
2023
|
|
2024
|
|
2023
|
|
(In
Millions)
|
|
Net
income
|
$
147.1
|
|
$
113.4
|
|
$ 432.4
|
|
$ 343.9
|
|
Loss from discontinued
operations, net of tax, attributable to Encompass Health
|
0.7
|
|
1.3
|
|
3.2
|
|
3.5
|
|
Net income attributable
to noncontrolling interests included in continuing
operations
|
(38.9)
|
|
(28.1)
|
|
(97.6)
|
|
(79.5)
|
|
Provision for income
tax expense
|
36.0
|
|
30.3
|
|
112.6
|
|
95.0
|
|
Interest expense and
amortization of debt discounts and fees
|
34.9
|
|
35.9
|
|
104.4
|
|
108.6
|
|
Depreciation and
amortization
|
78.4
|
|
67.3
|
|
221.6
|
|
203.8
|
|
Loss on early
extinguishment of debt
|
0.4
|
|
—
|
|
0.4
|
|
—
|
|
Loss on disposal or
impairment of assets
|
0.6
|
|
2.2
|
|
11.3
|
|
3.7
|
|
Stock-based
compensation
|
12.9
|
|
13.7
|
|
35.8
|
|
37.2
|
|
State regulatory change
impact on noncontrolling interests
|
—
|
|
—
|
|
—
|
|
(2.2)
|
|
Change in fair market
value of equity securities
|
(2.8)
|
|
1.5
|
|
(2.7)
|
|
2.1
|
|
Asset impairment impact
on noncontrolling interests
|
—
|
|
—
|
|
(7.3)
|
|
—
|
|
Adjusted
EBITDA
|
$
269.3
|
|
$
237.5
|
|
$ 814.1
|
|
$ 716.1
|
|
Encompass Health Corporation and
Subsidiaries
Supplemental Information
Reconciliation of Net Cash Provided by Operating
Activities to Adjusted Free Cash Flow
|
|
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
|
2024
|
|
2023
|
|
2024
|
|
2023
|
|
(In
Millions)
|
|
Net cash provided by
operating activities
|
$ 267.8
|
|
$ 215.2
|
|
$ 724.0
|
|
$ 649.8
|
|
Impact of discontinued
operations
|
1.0
|
|
1.7
|
|
3.7
|
|
4.6
|
|
Net cash provided by
operating activities of continuing operations
|
268.8
|
|
216.9
|
|
727.7
|
|
654.4
|
|
Capital expenditures
for maintenance
|
(46.2)
|
|
(35.3)
|
|
(133.8)
|
|
(129.8)
|
|
Distributions paid to
noncontrolling interests of consolidated affiliates
|
(33.0)
|
|
(32.5)
|
|
(85.5)
|
|
(91.9)
|
|
Items not indicative
of ongoing operating performance:
|
|
|
|
|
|
|
|
|
Transaction costs and
related liabilities
|
0.1
|
|
0.2
|
|
(8.6)
|
|
(0.5)
|
|
Adjusted free cash
flow
|
$ 189.7
|
|
$ 149.3
|
|
$ 499.8
|
|
$ 432.2
|
For the three months ended September 30, 2024, net cash
used in investing activities was $161.5
million and resulted primarily from capital expenditures.
Net cash used in financing activities during the three months ended
September 30, 2024 was $89.5
million and resulted primarily from net debt payments,
distributions paid to noncontrolling interests of consolidated
affiliates, cash dividends paid on common stock, and repurchases of
common stock partially offset by contributions from noncontrolling
interests of consolidated affiliates.
For the three months ended September 30, 2023, net cash
used in investing activities was $162.2
million and resulted primarily from capital expenditures.
Net cash used in financing activities during the three months ended
September 30, 2023 was $65.8
million and resulted primarily from net debt payments,
distributions paid to noncontrolling interests of consolidated
affiliates, and cash dividends paid on common stock partially
offset by contributions from noncontrolling interests of
consolidated affiliates.
For the nine months ended September 30, 2024, net cash used
in investing activities was $449.6
million and resulted primarily from capital expenditures.
Net cash used in financing activities during the nine months ended
September 30, 2024 was $179.7
million and resulted primarily from net debt payments,
distributions paid to noncontrolling interests of consolidated
affiliates, cash dividends paid on common stock, and repurchases of
common stock partially offset by contributions from noncontrolling
interests of consolidated affiliates.
For the nine months ended September 30, 2023, net cash used
in investing activities was $394.7
million and resulted primarily from capital expenditures.
Net cash used in financing activities during the nine months ended
September 30, 2023 was $167.3
million and resulted primarily from net debt payments,
distributions paid to noncontrolling interests of consolidated
affiliates, and cash dividends paid on common stock partially
offset by contributions from noncontrolling interests of
consolidated affiliates.
Encompass Health Corporation and
Subsidiaries
Forward-Looking
Statements
Statements contained in this press release and the
supplemental information which are not historical facts, such as
those relating to the business, strategy, outlook, growth targets
and guidance considerations, dividend strategies, effective income
tax rates, cost trends, legislative and regulatory developments or
their impacts, financial guidance, ability to return value to
shareholders, projected capital expenditures, acquisition
opportunities, development projects, addressable market size, other
balance sheet and cash flow plans, are forward-looking statements
within the meaning of the Private Securities Litigation Reform Act
of 1995. In addition, Encompass Health, through its senior
management, may from time to time make forward-looking public
statements concerning the matters described herein. All such
estimates, projections, and forward-looking information speak only
as of the date hereof, and Encompass Health undertakes no duty to
publicly update or revise such forward-looking information, whether
as a result of new information, future events, or otherwise. Such
forward-looking statements are necessarily estimates based upon
current information and involve a number of risks and
uncertainties. Actual events or results may differ materially from
those anticipated in these forward-looking statements as a result
of a variety of factors. While it is impossible to identify all
such factors, factors which could cause actual events or results to
differ materially from those estimated by Encompass Health include,
but are not limited to, an infectious disease outbreak, including
the speed, depth, geographic reach and duration of its spread,
which could decrease our patient volumes and revenues and lead to
staffing and supply shortages and associated cost increases;
Encompass Health's infectious disease prevention and control
efforts; the demand for Encompass Health's services, including
based on any downturns in the economy, consumer confidence, or the
capital markets; the price of Encompass Health's common stock as it
affects Encompass Health's willingness and ability to repurchase
shares and the financial and accounting effects of any repurchases;
any adverse outcome of various lawsuits, claims, and legal or
regulatory proceedings involving Encompass Health, including any
matters related to yet undiscovered issues, if any, in acquired
operations; Encompass Health's ability to attract and retain key
management personnel; any adverse effects on Encompass Health's
stock price resulting from the integration of acquired operations;
potential disruptions, breaches, or other incidents affecting the
proper operation, availability, or security of Encompass Health's
or its vendors' or partners' information systems, including
unauthorized access to or theft of patient, business associate, or
other sensitive information or inability to provide patient care
because of system unavailability as well as unforeseen issues, if
any, related to integration of acquired systems; the ability to
successfully integrate acquired operations, including realization
of anticipated tax benefits, revenues, and cost savings, minimizing
the negative impact on margins arising from the changes in staffing
and other operating practices, and avoidance of unforeseen exposure
to liabilities; Encompass Health's ability to successfully complete
and integrate de novo developments, acquisitions, investments, and
joint ventures consistent with its growth strategy; Encompass
Health's ability to realize construction cost savings from
prefabrication of hospitals; increases in Medicare audit activity,
including increased use of sampling and extrapolation, resulting in
additional unpaid reimbursement claims and an increase in the
backlog of appealed claims denials; changes, delays in (including
in connection with resolution of Medicare payment reviews or
appeals), or suspension of reimbursement for Encompass Health's
services by governmental or private payors; changes in the
regulation of the healthcare industry at either or both of the
federal and state levels, including as part of national healthcare
reform and deficit reduction and Encompass Health's ability to
adapt operations to those changes, including in connection with the
CMS inpatient rehabilitation review choice demonstration project;
competitive pressures in the healthcare industry and Encompass
Health's response thereto; Encompass Health's ability to obtain and
retain favorable arrangements with third-party payors; Encompass
Health's ability to control costs, particularly labor and employee
benefit costs, including group medical expenses; adverse effects
resulting from coverage determinations made by Medicare
Administrative Contractors regarding its Medicare reimbursement
claims and lengthening delays in Encompass Health's ability to
recover improperly denied claims through the administrative appeals
process on a timely basis; Encompass Health's ability to adapt to
changes in the healthcare delivery system, including value-based
purchasing and involvement in coordinated care initiatives or
programs that may arise with its referral sources; Encompass
Health's ability to attract and retain nurses, therapists, and
other healthcare professionals in a highly competitive environment
with often severe staffing shortages, which may be worsened by
infectious disease outbreaks, and the impact on Encompass Health's
labor expenses from potential union activity, staffing shortages,
and competitive compensation practices; general conditions in the
economy and capital markets, including any instability or
uncertainty related to armed conflict or an act of terrorism,
governmental impasse over approval of the
United States federal budget, an increase in the debt
ceiling, or an international sovereign debt crisis; the increase in
the cost of, or the decrease in the availability of, necessary
supplies, such as personal protective equipment; the increase in
the costs of defending and insuring against alleged
professional liability claims, and Encompass Health's ability to
predict the estimated costs related to such claims; and other
factors which may be identified from time to time in Encompass
Health's SEC filings and other public announcements, including
Encompass Health's Form 10‑K for the year ended
December 31, 2023 and Form 10-Q for the quarters ended
March 31, 2024, June 30, 2024, and September 30, 2024, when
filed.
Media Contact
Polly Manuel, 205 969-4532
polly.manuel@encompasshealth.com
Investor Relations Contact
Mark Miller, 205 970-5860
mark.miller@encompasshealth.com
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SOURCE Encompass Health Corp.