Encompass Health Corporation · NYSE:EHC
Encompass Health — Investor Presentation (June 2025)
62 slides from Encompass Health's investor presentation, Jun 25, 2025
Slide 1: Investor Reference Book Published: June 25, 2025
Investor Reference Book Published: June 25, 2025
Slide 2: Forward-looking statements
Encompass Health 2 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, g
Slide 3: Table of contents
Encompass Health 3 Business outlook . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-7 Company overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Slide 4: Glossary of terms and abbreviations
Encompass Health 4 Glossary of terms and abbreviations Medicare • Medicare refers to traditional Medicare / Medicare Fee-for-Service (FFS) programs. Medicare Advantage (“MA”) • Medicare Advantage may also be referred to as Medicare Part C and refers to the private health plans contracted by Medicare
Slide 5: Business Outlook
Business Outlook
Slide 6: Attractive healthcare sector and industry leading position
Encompass Health 6 Attractive healthcare sector Ÿ Large addressable market indicated by low conversion rate of presumptively eligible inpatient rehabilitation patients Ÿ Aging demographic driving increased demand for rehabilitation services Ÿ Supply of licensed IRF beds increased only modestly over
Slide 7: Growth targets
Encompass Health 7 6 to 10 de novos per year 80 to 120 bed additions per year 6% to 8% discharge CAGR Business outlook 2023 - 2027 de novos opened bed additions* discharge growth Recent results 8 in 2023 46 in 2023 8.7% in 2023 6 in 2024 147 in 2024* 8.3% in 2024 *Bed additions include remote and sa
Slide 8: Company Overview
Company Overview
Slide 9: Company overview: largest owner and operator of IRFs
Encompass Health 9 Rehabilitation hospitals “IRFs”* IRFs under development* *IRFs as of June 13, 2025; IRFs under development - previously announced under development as of June 13, 2025 **IRFs under development include de novo and remote and satellite locations.(1) Refer to pages 60-62 for end note
Slide 10: Clinical expertise
Encompass Health 10 Company overview Clinical expertise Refer to pages 60-62 for end notes. Data as of April 24, 2025 145 Hospitals hold one or more disease-specific certifications(2) Clinical expertise in Joint Commission specialty accreditations Number of EHC hospitals with accreditation and EHC’s
Slide 11: Care delivery model
Encompass Health 11 Encompass Health provides coordinated therapy and nursing services to patients requiring intensive inpatient rehabilitative care. Company overview Care delivery model Inpatient rehabilitation hospital services include: • Independent physician oversight of plan of care • 24/7 nurs
Slide 12: Primary services
Encompass Health 12 Company overview Primary services Independent physicians Independent physicians manage and treat medical conditions as well as oversee the plan of care and medical rehabilitation program. Physician services include: Ÿ Review and approve pre-admission screenings Ÿ Develop an indiv
Slide 13: Our patients
Encompass Health 13 Company overview Our patients IRF admission criteria At the time of admission, a patient must meet medical necessity criteria including: • requirement of active and ongoing therapeutic intervention of multiple therapy disciplines • expectation of active participation in, and bene
Slide 14: High quality clinical results
Encompass Health 14 Company overview High quality clinical results Discharge to Community Discharge to SNF Discharge to Acute Care Higher is better Lower is better Lower is better Percent of patients discharged to the community, including home or home with home health Percent of patients discharged
Slide 15: Leading position in cost effectiveness
Encompass Health 15 # of IRFs Avg. beds per IRF Avg. Medicare discharges per IRF(5) Avg. est. total payment per discharge for FY 2026 Encompass Health(4) = 163 66 926 $25,357 Free-standing = (Non-Encompass Health) 226 55 586 $27,938 Hospital units = 776 25 207 $28,376 Total(6) 1,165 36 381 $27,220 E
Slide 16: Payors and payment methods
Encompass Health 16 65.1% 16.8% 10.8% 3.3% 4.0% % of 2024 Revenues Medicare Prospective Payment System (“PPS”) - paid per discharge by Case Mix Group (“CMG”) Medicare Advantage CMG (~90% of MA revenue) - remaining contracts are per diem Managed Care Predominantly per diem Medicaid Varies by state Ot
Slide 17: IRF growth pipeline
Encompass Health 17 Disciplined approach to new store growth Considerations for entering a new market: – Market demographics and growth potential – CON requirements (initial and for expansion) – Presence of other inpatient rehabilitation services – Acute care hospital presence and discharge patterns
Slide 18: Joint venture partnerships with acute care providers
Encompass Health 18 67 joint venture hospitals* in place with major healthcare systems including: Joint ventures with acute care hospitals facilitate integrated care delivery Ascension St. John Hospital System Ballad Health Barnes-Jewish Cleveland Clinic Martin Health Geisinger Health System Lee Hea
Slide 19: Cash flow and liquidity
Encompass Health 19 Company overview Cash flow and liquidity $330.2 $340.1 $525.7 $690.3 2021 2022 2023 2024 $0.0 $250.0 $500.0 $750.0 YE 2021 YE 2022 YE 2023 YE 2024 0.0 2.5 5.0 *Historical financial results reflect Enhabit Home Health and Hospice as discontinued operations. Adjusted Free Cash Flow
Slide 20: Real estate holdings
Encompass Health 20 Company overview Real estate holdings Own ~79% of IRF real estate Rationale for real estate ownership Leases are generally structured as long-term, non-prepayable debt with annual rent escalators Ownership enhances flexibility in managing real estate portfolio Presence of real es
Slide 21: Industry Overview
Industry Overview
Slide 22: Continuum of healthcare services
Encompass Health 22 Preventive Routine health care (screenings, check-ups, patient counseling) to prevent illnesses, disease, or other health problems Acute Medical treatment of diseases or injuries for which a patient receives inpatient treatment for a brief but severe episode of illness Ambulatory
Slide 23: Health consumption spending
Encompass Health 23 H ea lt h co ns um pt io n sp en di ng *: $ 4, 32 5 (in billions) National healthcare spending: $4.867 trillion in 2023 Pe rs on al h ea lt hc ar e* : $4 ,1 07 $239 Investment $57 Government administration $160 Government public health $647 Retail outlet sales of medical products
Slide 24: Medicare 2023 spending
Encompass Health 24Source: Centers for Medicare & Medicaid Services, Medicare Trustees’ Report 2024 – page 11; and MedPAC, Medicare Payment Policy, March 2025 - pages 183, 225, 249, 267. 12% 2% 8% 4% 9% 42% 17%3% 3% Industry overview Medicare 2023 spending Total Medicare spending Medicare spending o
Slide 25: IRF qualifying conditions
Encompass Health 25 60% or more of an IRF’s annual admissions must have at least one medical diagnosis or functional impairment from a list of 13 qualifying conditions (“CMS-13”). Industry overview IRF qualifying conditions CMS-13 qualifying conditions 1 Stroke 2 Brain injury 3 Amputation 4 Spinal c
Slide 26: Post-acute care settings comparison
Encompass Health 26 Acute care hospital Home health Inpatient rehabilitation hospital Skilled nursing facility Medicare spending ($ billions) $9.6 $30.0 $15.7* # of Discharges/Beneficiaries^ ~404,000 ~1,600,000 ~2,700,000^ Average length of stay 12.5 days 34.5 days N/A # of Providers ~1,206 ~14,500
Slide 27: Medicare spending on post-acute services
Encompass Health 27 (P er ce nt ) 1.6% 1.5% 1.5% 1.6% 1.5% 1.6% 1.6% 1.6% 1.6% 1.7% 1.3% 1.7% 1.8% 1.7% 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 $0 $5 $10 $15 $2
Slide 28: Growth
Growth
Slide 29: Rationale for continued expansion of IRF capacity
Encompass Health 29 Growth Our rationale for continued expansion of IRF capacity Large, under penetrated and growing market Ÿ ~14.5% estimated conversion rate to IRF(11) Ÿ Aging demographic (~4% population growth CAGR for age 75+ population) Ÿ Supply of licensed IRF hospitals has increased only 4.2%
Slide 30: IRF growth strategy
Encompass Health 30 0 100 200 300 400 500 100 110 120 130 140 150 160 170 2018 2019 2020 2021 2022 2023 2024 2025 (P) Bed additions* 26 152 117 117 87 46 147 160 De novos (bed count) 169 120 170 350 410 395 280 340 De novos (new hospitals) 4 3 4 8 9 8 6 7 Total number of IRFs(12) 130 133 137 145 153
Slide 31: Demand for IRF services continues to grow
Encompass Health 31 Demand continues to benefit from a demographic tailwind: growth in the Medicare beneficiary population Age 75+Age 70-74Age 65-69 • The growth rate of Medicare beneficiaries increased to an ~3% CAGR in 2011, as “Baby Boomers” started turning age 65. • The average age of an Encompa
Slide 32: IRF supply / demand imbalance continues to widen
Encompass Health 32 Po pu la ti on in m ill io ns # of IRFs 12 12 14 14 15 16 17 17 17 17 18 18 19 19 19 16 16 17 18 19 19 20 21 22 24 24 25 26 27 28 10 11 11 11 11 11 11 12 12 13 12 12 13 13 14 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 0 25 50 75 0 200 400 600 800 1
Slide 33: IRF admission criteria and conversion rate
Encompass Health 33 IRF admission criteria u At the time of admission, a patient must meet medical necessity criteria including: ü require the active and ongoing therapeutic intervention of multiple therapy disciplines ü be expected to actively participate in, and benefit from, an intensive rehabili
Slide 34: Medicare levels of service required - IRF vs. SNF
Encompass Health 34 Growth Medicare levels of service required - IRF vs. SNF Industry averages IRF SNF Quality metrics* FFS average length of stay 12.5 days 34.5 days Discharge to community rate 67.2% 50.9% CMS requirements for IRFs vs. SNFs IRF SNF Regulatory Facility must satisfy regulatory and po
Slide 35: Proven growth model since 2009
Encompass Health 35 Growth Proven growth model since 2009 46% JV hospitals De novo hospitals-wholly owned Acquisitions-wholly owned De novo hospitals-JV Acquisitions-JV 80 hospitals added since 2009 40% joint ventures 81% increase in number of hospitals Data as of June 13, 2025
Slide 36: Robust de novo development pipeline
Encompass Health 36 Growth Robust de novo development pipeline 17 New hospitals announced and underway* Market considerations Ÿ Demographics and potential growth of local market Ÿ State CON, licensure and other regulatory requirements Ÿ Presence of other inpatient rehabilitation services Ÿ Geographi
Slide 37: De novo costs and timeline
Encompass Health 37 CON process (if applicable) Zoning & design Permitting Construction OpeningGroundbreaking Capital cost ($ in millions) 2023-2024 2025-2026 Construction, design, permitting, etc. $44.0 $47.0 Land 5.0 5.0 Equipment (including CIS) 5.5 6.0 Cost of a typical 50-bed IRF $54.5 $58.0 Pr
Slide 38: De novo project process
Encompass Health 38 Growth De novo project process *Project duration for conventional construction with prefabricated elements ranges from 18 to 22 months based on the specific project characteristics and site development conditions, and the amount of prefabrication. Conventional construction - tota
Slide 39: Prefabrication advantages
Encompass Health 39 Growth Prefabrication advantages Safety Stable work environment in manufacturing Reduction of waste Materials procured exactly as needed, not in stock lengths Reduction of on-site labor Less management for more efficiency Stabilized costs Known labor and material quantities Quali
Slide 40: De novo staffing model
Encompass Health 40 Hospital management Therapy staff Nursing staff Support staff Growth De novo staffing model Staffing model for a typical 50-bed de novo hospital at opening ~100 FTEs ~11 FTEs ~18 FTEs ~38 FTEs ~33 FTEs Staffing at maturity is ~150 FTEs.
Slide 41: De novo occupancy and EBITDA trend
Encompass Health 41 Month of operation 1 2 3 4 5 6 7 8 9 10 11 12 20% 30% 40% 50% 60% 70% 80% Occupancy Sustained positive EBITDA on average *EBITDA = earnings before interest, taxes, depreciation, and amortization directly attributable to the related hospital Growth De novo occupancy and EBITDA* tr
Slide 42: Operational Initiatives
Operational Initiatives
Slide 43: Operational initiatives summary
Encompass Health 43 Operational initiatives Summary Build market share in high acuity, IRF appropriate conditions • Utilize extensive database on IRF eligible patients to continuously refine clinical protocols and improve patient outcomes Develop and implement post-acute solutions, clinical initiati
Slide 44: Build market share in high acuity conditions: stroke
Encompass Health 44 Operational initiatives Build market share in high acuity conditions Increase stroke patient market share through education and awareness 2017 2018 2019 2020 2021 2022 2023 2024 30 ,6 14 32 ,3 48 34 ,4 69 34 ,3 30 36 ,5 69 39 ,0 04 EHC stroke discharges Stroke market share* Strok
Slide 45: Independent research on IRFs for stroke patients
Encompass Health 45 Operational initiatives Build market share in high acuity conditions Independent research concludes IRFs are a better rehabilitation option for stroke patients compared to SNFs *AHA/ASA press release, “Inpatient rehab recommended over nursing homes for stroke rehab,” issued May 4
Slide 46: Tablo in-house dialysis
Encompass Health 46 Operational initiatives Build market share in high acuity conditions Tablo available in 110 of our hospitals as of March 31, 2025, with additional locations planned in 2025. Approximately 5% of Encompass Health patients require dialysis services. The cost benefit per treatment is
Slide 47: Post-acute clinical innovation model
Encompass Health 47 Operational initiatives Post-acute clinical innovation model Identify the gap Assemble subject matter experts Assemble, synthesize & critique the evidenceData review & analysis Product development Translate, pilot & disseminate Implement & sustain Identify a gap or need and poten
Slide 48: Post-acute solutions: predictive models
Encompass Health 48 Trademarked system developed in 2015 to predict a patient’s risk of being transferred back to an acute care hospital. 40 clinical variables are considered in the risk analysis with risk levels assigned to each patient. Higher risk generates action items including clinician interv
Slide 49: Infection control, medication and readmission initiatives
Encompass Health 49 Standardized and improved infection control practices across the Company. These practices and oversight provided clinicians with tools to successfully navigate the COVID-19 pandemic. Applied evidence- based decision making Sepsis/SIRS alert Infection control Implemented an eviden
Slide 50: Culture of collaboration and best practices
Encompass Health 50 Operational initiatives Culture of collaboration and emphasis on best practices Collaboration among our hospital teams supports continuous learning and deployment of best practices •Strategic development as market dynamics change Standardization across all hospitals Value of coll
Slide 51: Therapy and clinical technologies
Encompass Health 51 Operational initiatives Therapy and clinical technologies Therapy Technology The therapy innovations committee reviews and recommends state of the art technology for our hospitals to ensure our therapy teams have the equipment and the training to provide the best care. (recent im
Slide 52: Information Technology
Information Technology
Slide 53: Clinical information system
Encompass Health 53 Information technology Clinical information system 2010 - Our first hospital went live with the Cerner EMR system 2012 - We began a five year rollout to every hospital Benefits: •Patient outcomes and safety •Operational efficiencies •Cost effectiveness •Change agility
Slide 54: Beacon management reporting
Encompass Health 54 Information technology Beacon management reporting Standardize the process, then automate it Enterprise scalability Proprietary large patient datasets Clinical and business knowledge Continuous improvement Proprietary Management System • Proprietary operations management system t
Slide 55: Patient / caregiver communication portal
Encompass Health 55 Information technology Patient / caregiver communication portal MyEncompass Health caregiver application The app shows a patient’s real-time progress toward their goals and an overview of their care plan in a secure manner. Information in the app is regularly updated by interfaci
Slide 56: Reconciliations to GAAP
Reconciliations to GAAP
Slide 57: Reconciliation: net cash from operations to Adjusted EBITDA
Encompass Health 57 Reconciliation Net cash provided by operating activities to Adjusted EBITDA(10) For the Year Ended December 31, ($ in millions) 2024 2023 2022 2021 Net cash provided by operating activities $ 1,002.8 $ 850.8 $ 705.8 $ 715.8 Interest expense and amortization of debt discounts and
Slide 58: Reconciliation: net income to Adjusted EBITDA
Encompass Health 58 Reconciliation Net income to Adjusted EBITDA(10) For the Year Ended December 31, ($ in millions) 2024 2023 2022 2021 Net income $ 596.6 $ 463.0 $ 365.9 $ 517.2 Loss (income) from discontinued operations, net of tax, attributable to Encompass Health 2.8 12.0 (15.2) (114.1) Net inc
Slide 59: Reconciliation: net cash from operations to adjusted free cash flow
Encompass Health 59 Reconciliation Net cash provided by operating activities to adjusted free cash flow(9) For the Year Ended December 31, ($ in millions) 2024 2023 2022 2021 Net cash provided by operating activities $ 1,002.8 $ 850.8 $ 705.8 $ 715.8 Impact of discontinued operations 3.1 16.0 (52.3)
Slide 60: End Notes
End Notes
Slide 61: End notes (1)-(9)
Encompass Health 61 (1) 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 bed
Slide 62: End notes (10) onward
Encompass Health 62 (10) Adjusted EBITDA is a non-GAAP financial measure. The Company’s leverage ratio (total consolidated debt to Adjusted EBITDA for the trailing four quarters) is, likewise, a non-GAAP measure. Management and some members of the investment community utilize Adjusted EBITDA as a fi