Encompass Health Corporation · NYSE:EHC
Encompass Health — Q1 2025 Earnings Presentation
31 slides from Encompass Health's earnings presentation, Apr 25, 2025
Slide 1: 2025 First Quarter Earnings Call
2025 First Quarter Earnings Call April 25, 2025 Supplemental information
Slide 2: Forward-looking statements
Forward-looking statements The information contained in this presentation includes certain estimates, projections and other forward-looking information that reflect Encompass Health’s current outlook, views and plans with respect to future events, including the business outlook, guidance and growth
Slide 3: Table of contents
Table of contents Summary ................................................................................................................................................................................ 4 Revenue .......................................................................................
Slide 4: Q1 2025 Summary
Q1 2025 Summary Q1 ($ in millions, except per share data) 2025 2024 %△ Encompass Health Net operating revenue $ 1,455.4 $ 1,316.0 10.6 % Adjusted EBITDA $ 313.6 $ 273.0 14.9 % Adjusted EPS $ 1.37 $ 1.12 22.3 % Adjusted free cash flow $ 222.4 $ 167.6 32.7 % u Capacity additions Opened 1 de novo hos
Slide 5: Revenue
Revenue Q1 Q1 % Change* ($ in millions) 2025 2024 Net operating revenue: Inpatient $ 1,417.7 $ 1,282.7 10.5% Outpatient and other 37.7 33.3 13.2% Total revenue $ 1,455.4 $ 1,316.0 10.6% (Actual Amounts) Discharges 64,985 61,111 6.3% New-store discharge growth 1.9% Same-store discharge growth 4.4% Ne
Slide 6: Adjusted EBITDA
Adjusted EBITDA(2) Q1 % of Q1 % of ($ in millions) 2025 Revenue 2024 Revenue Net operating revenue $ 1,455.4 $ 1,316.0 Operating expenses: Salaries and benefits (762.3) 52.4 % (711.6) 54.1 % Other operating expenses(a) (217.3) 14.9 % (190.2) 14.5 % Supplies (62.2) 4.3 % (58.5) 4.4 % Occupancy costs
Slide 7: Earnings per share - as reported
Earnings per share - as reported Q1 ($ in millions, except per share data) 2025 2024 Adjusted EBITDA $ 313.6 $ 273.0 Depreciation and amortization (79.2) (70.3) Interest expense and amortization of debt discounts and fees (31.8) (35.2) Stock-based compensation (9.5) (9.3) Loss on disposal or impairm
Slide 8: Adjusted earnings per share
Adjusted earnings per share(4) Q1 2025 2024 Diluted earnings per share, as reported $ 1.48 $ 1.11 Adjustments, net of tax: Asset impairment impact(3) — 0.02 Income tax adjustments(5) (0.12) (0.01) Adjusted earnings per share* $ 1.37 $ 1.12 u Adjusted earnings per share removes from GAAP earnings per
Slide 9: Q1 2025 Adjusted free cash flow
Q1 2025 Adjusted free cash flow(6) ($ in millions) $6.1 $4.7 $40.6 $— $3.4 $222.4 $167.6 Adjusted free cash Adjusted Working capital Cash interest Cash tax payments, Maintenance capital Adjusted free cash flow 3 mos. 2024 EBITDA and other payments net of refunds expenditures flow 3 mos. 2025 Reconci
Slide 10: 2025 Guidance - updated as of April 24, 2025
2025 Guidance - updated as of April 24, 2025 Previous Guidance Updated Guidance ($ in millions, except per share data) Net Operating Revenue $5,800 to $5,900 $5,850 to $5,925 Adjusted EBITDA(2) $1,160 to $1,200 $1,185 to $1,220 Adjusted earnings per share from continuing operations attributable $4.6
Slide 11: 2025 Guidance considerations - updated as of April 24, 2025
2025 Guidance considerations - updated as of April 24, 2025 u Pricing Medicare pricing increase of 3.3% for Q2 and Q3 and an estimated 2.7% for Q4 Managed Care pricing increase of 2.0% to 3.0% Bad debt reserves of 2.0% to 2.5% of revenue u Labor SWB per FTE* increase of 3.25% to 3.75% u Capa
Slide 12: Adjusted free cash flow assumptions
Adjusted free cash flow(6) assumptions 3 Months 2024 2025 Certain cash flow items 2025 ($ in millions) Actuals Assumptions Actuals Cash interest payments Decreased cash interest (net of amortization of debt $29.4 $127.7 $110 to $120 payments due to repayment of $250 million of Senior Notes discounts
Slide 13: Uses of free cash flow
Uses of free cash flow 3 Months 2025 2024 2025 ($ in millions) Actuals Actuals Assumptions IRF bed expansions $41.4 $96.8 $160 to $175 New IRFs Growth - De novos 87.7 358.1 380 to 390 - Replacement IRFs and other — 3.0 TBD $129.1 $457.9 $540 to $565 Debt Change in total debt(8) $25.9 $214.8 TBD redu
Slide 14: Appendix
Appendix
Slide 15: Encompass Health: Largest owner and operator of rehabilitation hospitals
Encompass Health Largest owner and operator of rehabilitation hospitals Company profile as of 03/31/25 167 Rehabilitation hospitals “IRFs” 66 are joint ventures 17 38 IRFs under States and development** Puerto Rico Key statistics trailing four quarters Rehabilitation hospitals “IRFs” ~252,400 patien
Slide 16: Growth targets, fundamentals and value drivers
Growth targets, fundamentals and value drivers u 2023 - 2027 Growth targets 6 to 10 de novos per year 80 to 120 bed additions per year 6% to 8% discharge CAGR u Large, under penetrated, and growing inpatient rehabilitation market Large addressable market indicated by low conversion rate of p
Slide 17: Development activity
Development activity Inpatient Rehabilitation Hospitals opened or under development Joint Expected 17 venture open date 2025 2026 2027 De novos* IRF development projects Athens, GA ü 40 — — 1 Fort Myers, FL ü 2Q25 60 — — announced and underway** 2 Daytona Beach, FL 2Q25 50 — — 3 Danbury, CT 3Q25 40
Slide 18: Debt maturity profile - face value
Debt maturity profile - face value As of March 31, 2025* ($ in millions) Callable Callable at par at 102.375 $953 Available Callable beginning April 2026 Revolver $800 $800 $— Drawn + Senior capacity Senior Callable $47 reserved Notes Notes at par for LCs 4.75% 4.5% $100 $400 Senior Notes Senior 5.7
Slide 19: Debt schedule
Debt schedule Change in March 31, December 31, Debt vs. ($ in millions) 2025 2024 YE 2024 Advances under $1 billion revolving credit facility $ — $ 20.0 $ (20.0) Bonds Payable: 5.75% Senior Notes due 2025 99.9 99.8 0.1 4.50% Senior Notes due 2028 789.3 788.4 0.9 4.75% Senior Notes due 2030 784.9 784
Slide 20: New-store/same-store growth
New-store/same-store growth Clermont, FL (50 beds) Lakeland, FL (50 beds) Bowie, MD (60 beds) Cape Coral, FL (40 beds) 20.0% Jacksonville, FL (50 beds) Johnston, RI (50 beds) Fort Mill, SC (39 beds) Prosper, TX (40 beds) Athens, GA Knoxville, TN (73 beds) Fitchburg, WI (56 beds) (40 beds) Owasso, OK
Slide 21: Payment sources (percent of revenues)
Payment sources (percent of revenues) Q1 Full Year 2025 2024 2024 Medicare 67.0 % 64.9 % 65.1 % Medicare Advantage 16.5 % 17.0 % 16.8 % Managed care 10.0 % 10.9 % 10.8 % Medicaid 2.9 % 3.4 % 3.3 % Other third-party payors 0.6 % 0.7 % 0.8 % Workers’ compensation 0.4 % 0.5 % 0.5 % Patients 0.2 % 0.3 %
Slide 22: Operational metrics
Operational metrics Q1 Q4 Q3 Q2 Q1 Full Year 2025 2024 2024 2024 2024 2024 Net patient revenue-inpatient $ 1,417.7 $ 1,366.1 $ 1,316.2 $ 1,265.5 $ 1,282.7 $ 5,230.5 Net patient revenue-outpatient and other revenues 37.7 38.9 34.8 35.7 33.3 142.7 Net operating revenues $ 1,455.4 $ 1,405.0 $ 1,351.0 $
Slide 23: Share information
Share information Weighted Average for the Period Q1 Full Year (in millions) 2025 2024 2024 2023 2022 Basic shares outstanding 100.5 99.8 99.9 99.5 99.2 Restricted stock awards, dilutive stock options, and restricted stock units 1.6 2.4 2.3 1.8 1.2 Diluted shares outstanding 102.1 102.2 102.2 101.3
Slide 24: Net cash provided by operating activities reconciled to Adjusted EBITDA
Net cash provided by operating activities reconciled to Adjusted EBITDA(2) Q1 Full Year ($ in millions) 2025 2024 2024 Net cash provided by operating activities $ 288.6 $ 238.8 $ 1,002.8 Interest expense and amortization of debt discounts and fees 31.8 35.2 137.4 (Loss) gain on sale of investments,
Slide 25: Reconciliation of net income to Adjusted EBITDA
Reconciliation of net income to Adjusted EBITDA(2) Q1 Full Year ($ in millions) 2025 2024 2024 Net income $ 196.5 $ 138.8 $ 596.6 Loss from discontinued operations, net of tax, attributable to Encompass Health 0.5 1.3 2.8 Net income attributable to noncontrolling interests included in continuing ope
Slide 26: Reconciliation of net cash provided by operating activities to adjusted free cash flow
Reconciliation of net cash provided by operating activities to adjusted free cash flow(6) Q1 Full Year ($ in millions) 2025 2024 2024 Net cash provided by operating activities $ 288.6 $ 238.8 $ 1,002.8 Impact of discontinued operations 0.7 0.7 3.1 Net cash provided by operating activities of continu
Slide 27: Adjusted EPS - Q1 2025
Adjusted EPS(4) - Q1 2025 For the Three Months Ended March 31, 2025 Adjustments Change in Fair As Income Tax Market Value of As Reported Adjustments Equity Securities Adjusted ($ in millions, except per share amounts) Adjusted EBITDA $ 313.6 $ — $ — $ 313.6 Depreciation and amortization (79.2) — — (
Slide 28: Adjusted EPS - Q1 2024
Adjusted EPS(4) - Q1 2024 For the Three Months Ended March 31, 2024 Adjustments Asset Change in Fair As Impairment Income Tax Market Value of As Reported Impact Adjustments Equity Securities Adjusted ($ in millions, except per share amounts) Adjusted EBITDA $ 273.0 $ — $ — $ — $ 273.0 Depreciation a
Slide 29: Adjusted EPS - 2024
Adjusted EPS(4) - 2024 For the Year Ended December 31, 2024 Adjustments Change in Fair Loss on Market Asset Early Value of As Impairment Exting. Income Tax Equity As Reported Impact of Debt Adjustments Securities Adjusted ($ in millions, except per share amounts) Adjusted EBITDA $1,103.7 $ — $ — $ —
Slide 30: End notes
End notes (1) Historically, we have used the term “provider tax revenues” to refer to “Medicaid supplemental payments,” both of which represent amounts received in connection with state Medicaid programs that are not included in the specific Medicaid claim reimbursements we receive. These amounts in
Slide 31: End notes (continued)
End notes (continued) (7) Our inpatient rehabilitation hospitals (“IRFs”) may operate one or more satellite and/or remote locations. Satellite and remote locations are located proximate to one of our existing IRFs but do not have a separate Medicare provider number. As such, they are considered a be