Encompass Health Corp (EHC) Reports Q3 2023 Earnings, Updates Full-Year Guidance
Encompass Health Corp (NYSE:EHC) reported Q3 2023 net operating revenue of $1,206.9 million, a 10.8% increase from Q3 2022.
Income from continuing operations attributable to EHC per diluted share rose by 34.9% to $0.85.
Cash flows provided by operating activities surged by 207.0% to $215.2 million.
The company updated its full-year 2023 guidance, with adjusted EBITDA now expected to be between $940 million and $955 million.
Encompass Health Corp (NYSE:EHC), the largest owner and operator of inpatient rehabilitation hospitals in the United States, released its Q3 2023 earnings report on October 26, 2023. The company reported a strong performance for the quarter, with significant growth in net operating revenue and income from continuing operations.
Financial Highlights
Net operating revenue for Q3 2023 was $1,206.9 million, up 10.8% from $1,089.5 million in Q3 2022. This growth was primarily driven by a 7.3% increase in discharges, including a 4.3% same-store growth. Net patient revenue per discharge also grew by 3.3%.
Income from continuing operations attributable to EHC per diluted share increased by 34.9% to $0.85, while adjusted earnings per share rose by 28.4% to $0.86. Cash flows provided by operating activities saw a significant increase of 207.0% to $215.2 million, largely due to lower working capital and an increase in net income.
Adjusted EBITDA for the quarter was $237.5 million, up 21.6% from $195.3 million in Q3 2022. This increase was primarily due to increased revenue and a decrease in contract labor expense and sign-on and shift bonuses.
Updated 2023 Guidance
EHC updated its full-year 2023 guidance, now expecting net operating revenue to be between $4,770 million and $4,800 million, and adjusted EBITDA to be between $940 million and $955 million. Adjusted earnings per share from continuing operations attributable to EHC are expected to be between $3.41 and $3.52.
CEO Commentary
We are very pleased with our third quarter performance, said President and Chief Executive Officer of Encompass Health Mark Tarr. Revenue growth of 10.8% driven primarily by strong discharge growth combined with year-over-year improvement in labor costs resulting in Adjusted EBITDA growth of 21.6%. Our value proposition and operating strategy continue to be validated and we remain highly optimistic about the long-term prospects of our business. We are updating our 2023 guidance to reflect our third quarter results and expectations for the balance of the year.
Looking Ahead
With a strong Q3 performance and updated full-year guidance, Encompass Health Corp (NYSE:EHC) continues to demonstrate its resilience and operational efficiency in the healthcare sector. The company's focus on discharge growth and cost management has yielded positive results, and it remains optimistic about its long-term prospects.
Explore the complete 8-K earnings release (here) from Encompass Health Corp for further details.
This article first appeared on GuruFocus.
