Encompass Health's (EHC) 158th Hospital Opens in Maryland
Encompass Health Corporation EHC recently announced that its Rehabilitation Hospital of Bowie has opened, marking its second location in Maryland.
This 60-bed inpatient rehabilitation unit is expected to serve patients with neurological disorders, strokes, brain and spinal cord injuries, amputations and orthopedic conditions. Along with full-day nursing care, different types of therapies will be provided in the hospital focused on restoring functioning ability.
This move bodes well with the company’s objective to bolster its competitive position and capture a better market share in a highly fragmented market. Encompass Health’s expanding rehabilitation hospitals’ network leading to volume growth, should boost its top line in the future.
The population aged between 75 and 79 years is expected to grow 5% each year, reinforcing the company’s long-term prospects. An aging population is expected to fuel the company’s Medicare business, which contributed 65.3% to the total revenues in the first quarter.
Apart from adding hospitals to its portfolio, the company also invests in hospital-based technology to enhance its offerings. It also provides in-house dialysis in 64 hospitals, which results in the reduction of costs and improved patient satisfaction and volumes.
The Rehabilitation Hospital of Bowie marks EHC’s 158th hospital in the country. The company expects to meet the increasing need of patients requiring rehabilitation services by having an active pipeline in place for de novo projects. It expects to open three de novos and add 93 beds to existing hospitals over the next three quarters. Moreover, 18 de novos are under development and will likely open after 2023.
Encompass Health expects to incur $10 to $12 million as start-up costs for these new facilities. The company is using prefabrication alternatives to keep the design and construction costs within bounds. Moreover, the company raised the 2023 guidance of net operating revenues in the range of $4,700-$4,770 million, the mid-point of which implies growth of 8.9% from the 2022 figure.
Price Performance
Shares of Encompass Health have gained 10.6% in the past six months against the 2.2% decline of the industry.
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Zacks Rank & Stocks to Consider
Encompass Health currently carries a Zacks Rank #3 (Hold).
Investors interested in the broader medical space can consider these better-ranked players like Penumbra, Inc. PEN, Merit Medical Systems, Inc. MMSI and The Ensign Group, Inc. ENSG. Penumbra sports a Zacks Rank #1 (Strong Buy), while Merit Medical Systems and The Ensign Group carry a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Penumbra’s earnings surpassed estimates in each of the last four quarters, the average surprise being 109.4%. The Zacks Consensus Estimate for PEN’s 2023 earnings is pegged at $1.56 per share, which indicates a nearly 10-fold increase from the prior-year figure.
The Zacks Consensus Estimate for revenues suggests an improvement of 24.1% from the year-ago tally. The consensus mark for PEN’s 2023 earnings has moved 24.8% north in the past 60 days.
The bottom line of Merit Medical Systems outpaced estimates in each of the trailing four quarters, the average surprise being 20.2%. The Zacks Consensus Estimate for MMSI’s 2023 earnings indicates a 7% rise, while the same for revenues suggests an improvement of 6.2% from the respective prior-year tallies. The consensus mark for MMSI’s 2023 earnings has moved 1.4% north in the past 60 days.
The Ensign Group’s earnings outpaced estimates in one of the trailing four quarters, missed the mark once and matched the same on the remaining two occasions, the average surprise being 0.5%.
The Zacks Consensus Estimate for ENSG’s 2023 earnings indicates a 13.5% improvement, while the same for revenues suggests an improvement of 22.2% from the respective prior-year tallies. The consensus mark for ENSG’s 2023 earnings has moved up 0.4% in the past 60 days.
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