ENCOMPASS HEALTH CORPORATION Exhibit 99.1
Media Contact | April 24, 2024 |
Kennedi Spurling, 205 970-5912 | |
kennedi.spurling@encompasshealth.com | |
Investor Relations Contact | |
Mark Miller, 205 970-5860 | |
mark.miller@encompasshealth.com |
Encompass Health reports results for first quarter 2024
Increases full-year guidance
BIRMINGHAM, Ala. - 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 first quarter ended March 31, 2024.
Summary results | |||||||||||
Growth | |||||||||||
Q1 2024 | Q1 2023 | Dollars | Percent | ||||||||
(In Millions, Except Per Share Data) | |||||||||||
Net operating revenue | $ | 1,316.0 | $ | 1,160.4 | $ | 155.6 | 13.4 % | ||||
Income from continuing operations attributable to | |||||||||||
Encompass Health per diluted share | 1.11 | 0.88 | 0.23 | 26.1 % | |||||||
Adjusted earnings per share | 1.12 | 0.88 | 0.24 | 27.3 % | |||||||
Cash flows provided by operating activities | 238.8 | 227.9 | 10.9 | 4.8 % | |||||||
Adjusted EBITDA | 273.0 | 229.0 | 44.0 | 19.2 % | |||||||
Adjusted free cash flow | 167.6 | 158.7 | 8.9 | 5.6 % | |||||||
(Actual Amounts) | |||||||||||
Discharges | 61,111 | 55,557 | 10.0 % | ||||||||
Same-store discharge growth | 6.7 % | ||||||||||
Net patient revenue per discharge | $ | 20,990 | $ | 20,415 | 2.8 % |
See attached supplemental information for calculations of non-GAAP measures and reconciliations to their most comparable GAAP measure.
"We are pleased with our first quarter performance," said President and Chief Executive Officer of Encompass Health Mark Tarr. "Revenue growth of 13.4% driven primarily by strong discharge growth combined with prudent expense management to drive Adjusted EBITDA growth of 19.2%. Our value proposition and operating strategy continue to be validated and we remain highly optimistic about the long- term prospects of our business."
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- Revenue growth of 13.4% resulted primarily from discharge growth of 10.0%, including same-store growth of 6.7%. Net revenue per discharge grew 2.8%.
- Cash flows provided by operating activities increased 4.8% to $238.8 million, primarily due to an increase in net income partly offset by changes in working capital.
- Adjusted EBITDA increased 19.2%, primarily from increased revenue and overall expense management.
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 Adjusted EBITDA
Adjusted earnings per share from continuing operations attributable to Encompass Health
$5,200 to $5,300 $1,015 to $1,055
$3.77 to $4.06
$5,250 to $5,325 $1,030 to $1,065
$3.86 to $4.11
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 Thursday, April 25, 2024 to discuss its results for the first 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 800 579-2543 and giving the conference ID EHCQ124. International callers should dial 785 424-1699 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 160 hospitals in 37 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 Modern Healthcare's Best Places to Work in Healthcare. For more information, visit encompasshealth.com, or follow us on our newsroom, Twitter, Instagram and Facebook.
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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 March 31, 2024 (the "March 2024 Form 10-Q"), when filed, as well as the Company's Current Report on Form 8-K filed on April 24, 2024 (the "Q1 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 April 25, 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 Q1 Earnings Form 8-K. Readers are encouraged to review the "Note Regarding Presentation of Non-GAAP Financial Measures" included in the Q1 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 $145 million
- Amortization of debt-related items - approximately $10 million
The Q1 Earnings Form 8-K and, when filed, the March 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.
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Encompass Health Corporation and Subsidiaries
Condensed Consolidated Statements of Comprehensive Income
(Unaudited)
Three Months Ended March 31, | |||||
2024 | 2023 | ||||
(In Millions, Except Per Share Data) | |||||
Net operating revenues | $ | 1,316.0 | $ | 1,160.4 | |
Operating expenses: | |||||
Salaries and benefits | 711.6 | 629.0 | |||
Other operating expenses | 203.9 | 177.9 | |||
Occupancy costs | 14.0 | 13.8 | |||
Supplies | 58.5 | 53.8 | |||
General and administrative expenses | 50.2 | 43.4 | |||
Depreciation and amortization | 70.3 | 63.9 | |||
Total operating expenses | 1,108.5 | 981.8 | |||
Interest expense and amortization of debt discounts and fees | 35.2 | 36.4 | |||
Other income | (5.4) | (3.6) | |||
Equity in net income of nonconsolidated affiliates | (0.7) | (0.4) | |||
Income from continuing operations before income tax expense | 178.4 | 146.2 | |||
Provision for income tax expense | 38.3 | 31.9 | |||
Income from continuing operations | 140.1 | 114.3 | |||
Loss from discontinued operations, net of tax | (1.3) | (1.0) | |||
Net and comprehensive income | 138.8 | 113.3 | |||
Less: Net and comprehensive income attributable to noncontrolling | |||||
interests | (26.3) | (25.6) | |||
Net and comprehensive income attributable to Encompass | |||||
Health | $ | 112.5 | $ | 87.7 | |
Weighted average common shares outstanding: | |||||
Basic | 99.8 | 99.4 | |||
Diluted | |||||
102.2 | 100.9 | ||||
Earnings per common share: | |||||
Basic earnings per share attributable to Encompass Health | |||||
common shareholders: | |||||
Continuing operations | $ | 1.13 | $ | 0.89 | |
Discontinued operations | (0.01) | (0.01) | |||
Net income | $ | 1.12 | $ | 0.88 | |
Diluted earnings per share attributable to Encompass Health | |||||
common shareholders: | |||||
Continuing operations | $ | 1.11 | $ | 0.88 | |
Discontinued operations | (0.01) | (0.01) | |||
Net income | $ | 1.10 | $ | 0.87 | |
Amounts attributable to Encompass Health common | |||||
shareholders: | |||||
Income from continuing operations | $ | 113.8 | $ | 88.7 | |
Loss from discontinued operations, net of tax | (1.3) | (1.0) | |||
Net income attributable to Encompass Health | $ | 112.5 | $ | 87.7 | |
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Encompass Health Corporation and Subsidiaries
Condensed Consolidated Balance Sheets
(Unaudited)
March 31, | December 31, | ||||
2024 | 2023 | ||||
(In | Millions) | ||||
Assets | |||||
Current assets: | |||||
Cash and cash equivalents | $ | 134.4 | $ | 69.1 | |
Restricted cash | 38.3 | 35.1 | |||
Accounts receivable | 619.3 | 611.6 | |||
Other current assets | 137.8 | 126.0 | |||
Total current assets | 929.8 | 841.8 | |||
Property and equipment, net | 3,370.3 | 3,301.0 | |||
Operating lease right-of-use assets | 199.1 | 208.5 | |||
Goodwill | 1,281.3 | 1,281.3 | |||
Intangible assets, net | 272.2 | 278.2 | |||
Other long-term assets | 178.7 | 191.6 | |||
Total assets | $ | 6,231.4 | $ | 6,102.4 | |
Liabilities and Shareholders' Equity | |||||
Current liabilities: | |||||
Current portion of long-term debt | $ | 25.6 | $ | 24.8 | |
Current operating lease liabilities | 25.4 | 24.1 | |||
Accounts payable | 166.1 | 170.0 | |||
Accrued expenses and other current liabilities | 463.2 | 437.5 | |||
Total current liabilities | 680.3 | 656.4 | |||
Long-term debt, net of current portion | 2,682.6 | 2,687.8 | |||
Long-term operating lease liabilities | 185.8 | 196.1 | |||
Deferred income tax liabilities | 93.5 | 87.0 | |||
Other long-term liabilities | 185.8 | 177.9 | |||
Total liabilities | 3,828.0 | 3,805.2 | |||
Commitments and contingencies | |||||
Redeemable noncontrolling interests | 41.1 | 42.0 | |||
Shareholders' equity: | |||||
Encompass Health shareholders' equity | 1,741.9 | 1,647.5 | |||
Noncontrolling interests | 620.4 | 607.7 | |||
Total shareholders' equity | 2,362.3 | 2,255.2 | |||
Total liabilities and shareholders' equity | $ | 6,231.4 | $ | 6,102.4 | |
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Encompass Health Corporation and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Unaudited)
Three Months Ended March 31, | |||||
2024 | 2023 | ||||
(In Millions) | |||||
Cash flows from operating activities: | |||||
Net income | $ | 138.8 | $ | 113.3 | |
Loss from discontinued operations, net of tax | 1.3 | 1.0 | |||
Adjustments to reconcile net income to net cash provided by operating | |||||
activities- | |||||
Depreciation and amortization | 70.3 | 63.9 | |||
Stock-based compensation | 9.3 | 7.9 | |||
Deferred tax expense | 6.5 | 4.0 | |||
Other, net | 14.9 | 1.2 | |||
Change in assets and liabilities, net of acquisitions- | |||||
Accounts receivable | (7.7) | 23.7 | |||
Other assets | (16.0) | (3.7) | |||
Accounts payable | (3.8) | 1.2 | |||
Other liabilities | 25.9 | 16.7 | |||
Net cash used in operating activities of discontinued operations | (0.7) | (1.3) | |||
Total adjustments | 98.7 | 113.6 | |||
Net cash provided by operating activities | 238.8 | 227.9 | |||
Cash flows from investing activities: | |||||
Purchases of property, equipment, and intangible assets | (139.4) | (99.8) | |||
Proceeds from sale of restricted investments | 16.0 | 0.2 | |||
Other, net | (6.3) | (4.4) | |||
Net cash used in investing activities | (129.7) | (104.0) | |||
Cash flows from financing activities: | |||||
Principal payments on debt, including pre-payments | (1.0) | (0.6) | |||
Borrowings on revolving credit facility | 50.0 | 30.0 | |||
Payments on revolving credit facility | (50.0) | (45.0) | |||
Taxes paid on behalf of employees for shares withheld | (12.1) | (7.7) | |||
Contributions from noncontrolling interests of consolidated affiliates | 18.4 | 17.0 | |||
Dividends paid on common stock | (15.9) | (15.6) | |||
Distributions paid to noncontrolling interests of consolidated affiliates | (24.7) | (31.8) | |||
Other, net | (5.3) | (4.3) | |||
Net cash used in financing activities | (40.6) | (58.0) | |||
Increase in cash, cash equivalents, and restricted cash | 68.5 | 65.9 | |||
Cash, cash equivalents, and restricted cash at beginning of period | 104.2 | 53.4 | |||
Cash, cash equivalents, and restricted cash at end of period | $ | 172.7 | $ | 119.3 | |
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 | |||||
$ | 134.4 | $ | 85.0 | ||
Restricted cash at end of period | 38.3 | 34.3 | |||
Cash, cash equivalents, and restricted cash at end of period | $ | 172.7 | $ | 119.3 | |
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Encompass Health Corporation and Subsidiaries
Supplemental Information
Earnings Per Share
Three Months Ended March 31, | |||||
2024 | 2023 | ||||
(In Millions, Except Per Share Data) | |||||
Adjusted EBITDA | $ | 273.0 | $ | 229.0 | |
Depreciation and amortization | (70.3) | (63.9) | |||
Interest expense and amortization of debt discounts and fees | (35.2) | (36.4) | |||
Stock-based compensation | (9.3) | (7.9) | |||
Loss on disposal or impairment of assets | (13.7) | (0.7) | |||
144.5 | 120.1 | ||||
Items not indicative of ongoing operating performance: | |||||
Change in fair market value of equity securities | 0.3 | 0.5 | |||
Asset impairment impact on noncontrolling interests | 7.3 | - | |||
Pre-tax income | 152.1 | 120.6 | |||
Income tax expense | (38.3) | (31.9) | |||
Income from continuing operations (1) | $ | 113.8 | $ | 88.7 | |
Basic shares | 99.8 | 99.4 | |||
Diluted shares | |||||
102.2 | 100.9 | ||||
Basic earnings per share (1) | |||||
$ | 1.13 | $ | 0.89 | ||
Diluted earnings per share (1) | |||||
$ | 1.11 | $ | 0.88 | ||
- Income from continuing operations attributable to Encompass Health
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Encompass Health Corporation and Subsidiaries
Supplemental Information
Adjusted Earnings Per Share
Q1 | |||||
2024 | 2023 | ||||
Earnings per share, as reported | $ | 1.11 | $ | 0.88 | |
Adjustments, net of tax: | |||||
Asset impairment impact | 0.02 | - | |||
Income tax adjustments | (0.01) | - | |||
Adjusted earnings per share* | $ | 1.12 | $ | 0.88 | |
- Adjusted EPS may not sum due to rounding.
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Encompass Health Corporation and Subsidiaries
Supplemental Information
Reconciliation of Net Cash Provided by Operating Activities to Adjusted EBITDA
Three Months Ended March 31, | |||||
2024 | 2023 | ||||
(In Millions) | |||||
Net cash provided by operating activities | $ | 238.8 | $ | 227.9 | |
Interest expense and amortization of debt discounts and fees | 35.2 | 36.4 | |||
Gain on sale of investments, excluding impairments | 1.3 | 1.7 | |||
Equity in net income of nonconsolidated affiliates | 0.7 | 0.4 | |||
Net income attributable to noncontrolling interests in continuing | |||||
operations | (26.3) | (25.6) | |||
Amortization of debt-related items | (2.4) | (2.3) | |||
Distributions from nonconsolidated affiliates | (0.8) | (0.1) | |||
Current portion of income tax expense | 31.8 | 27.9 | |||
Change in assets and liabilities | 1.6 | (37.9) | |||
Cash used in operating activities of discontinued operations | 0.7 | 1.3 | |||
Asset impairment impact on noncontrolling interests | (7.3) | - | |||
Change in fair market value of equity securities | (0.3) | (0.5) | |||
Other | - | (0.2) | |||
Adjusted EBITDA | $ | 273.0 | $ | 229.0 | |
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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 March 31, 2024 | |||||||||||||||
Adjustments | |||||||||||||||
Change in Fair | |||||||||||||||
Asset | Market Value | ||||||||||||||
As | Impairment | Income Tax | of Equity | As | |||||||||||
Reported | Impact | Adjustments | Securities | Adjusted | |||||||||||
(In Millions, | Except Per Share Amounts) | ||||||||||||||
Adjusted EBITDA* | $ | 273.0 | $ | - | $ | - | $ | - | $ | 273.0 | |||||
Depreciation and amortization | (70.3) | - | - | - | (70.3) | ||||||||||
Interest expense and amortization of debt discounts and fees | (35.2) | - | - | - | (35.2) | ||||||||||
Stock-based compensation | (9.3) | - | - | - | (9.3) | ||||||||||
Loss on disposal or impairment of assets | (13.7) | 10.4 | - | - | (3.3) | ||||||||||
Change in fair market value of equity securities | 0.3 | - | - | (0.3) | - | ||||||||||
Asset impairment impact on noncontrolling interests | 7.3 | (7.3) | - | - | - | ||||||||||
Income from continuing operations before income tax expense | 152.1 | 3.1 | - | (0.3) | 154.9 | ||||||||||
Provision for income tax expense | (38.3) | (1.3) | (0.6) | 0.1 | (40.1) | ||||||||||
Income from continuing operations attributable to Encompass | |||||||||||||||
Health | $ | 113.8 | $ | 1.8 | $ | (0.6) | $ | (0.2) | $ | 114.8 | |||||
Diluted earnings per share from continuing operations** | $ | 1.11 | $ | 0.02 | $ | (0.01) | $ | - | $ | 1.12 | |||||
Diluted shares used in calculation | 102.2 | ||||||||||||||
* Reconciliation to GAAP provided on page 9
** Adjusted EPS may not sum across due to rounding.
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Encompass Health Corporation published this content on 26 April 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 26 April 2024 15:41:51 UTC.
