Encompass Health Reports 29.5% Increase in Net Income to $455.7 Million for 2024

Encompass Health Corporation (EHC), the nation's largest owner and operator of inpatient rehabilitation hospitals, reported a net income attributable to Encompass Health of $455.7 million for the year ended December 31, 2024, a 29.5% increase compared to $352.0 million in 2023. Net operating revenues rose 11.9% to $5,373.2 million, driven by an 8.3% increase in discharges to 248,498 and a 2.9% rise in net patient revenue per discharge to $21,048. The increase in net operating revenues also reflects a 32.9% growth in outpatient and other revenue to $142.7 million.

Operating expenses increased by 10.8% to $4,508.7 million, primarily due to increases in salaries and benefits (11.6% to $2,901.0 million), other operating expenses (11.6% to $802.6 million), and depreciation and amortization (9.4% to $299.6 million). The company attributed the increase in salaries and benefits to salary and benefit cost increases for employees and increased patient volumes. The increase in other operating expenses included a $10.4 million impairment charge related to the closure of a joint venture hospital.

During 2024, Encompass Health opened six new inpatient rehabilitation hospitals and added 147 beds to existing hospitals. The company also announced plans for several additional de novo projects and bed additions in 2025 and beyond, targeting the addition of 6 to 10 new hospitals and 80 to 120 beds annually. Strategic developments included the expansion of a joint venture with Piedmont Healthcare, contributing assets and operations of a hospital in Augusta, Georgia. The company also continued its shareholder distributions through common stock repurchases ($31.1 million) and quarterly cash dividends ($0.17 per share).

Key operational indicators showed a 3.5% increase in occupancy to 74.6%, and a slight decrease in average length of stay (1.6% to 12.2 days). The company employed approximately 40,000 individuals as of December 31, 2024, with full-time equivalent (FTE) employees increasing by 6.9% to 28,085. The company noted that the shortage of clinical personnel in some markets remains a significant operating issue.

Encompass Health expressed optimism about its future prospects, citing demographic trends and its competitive strengths. However, the company acknowledged key challenges, including operating in a highly regulated industry, potential changes in Medicare reimbursement and regulatory requirements, maintaining strong volume growth, and recruiting and retaining high-quality personnel. The company's outlook anticipates continued strong cash flows from operations to support its growth strategy and shareholder distributions.