Encompass Health's Q4 2024: Decoding Contradictions in Labor Costs, Market Share, and Medicare Growth

These are the key contradictions discussed in Encompass Health's latest 2024Q4 earnings call, specifically including: SWB per FTE Inflation Expectations, Turnover Rates Among Clinicians, Bad Debt Expense Trends, Market Share Gains, Medicare Advantage Growth and Rate Adjustments, and Staffing Bonuses and Wage Trends:



Financial Performance and Growth:
- Encompass Health reported a 12.7% increase in revenue to $1.4 billion and a 13.6% increase in adjusted EBITDA to $289.6 million for Q4 2024.
- The growth was driven by 7.8% discharge growth and a 4.2% increase in net revenue per discharge.

Market Share and Patient Demand:
- Medicare Advantage discharges increased 14.7% for the quarter, contributing significantly to overall discharge growth.
- This growth is attributed to the company's strategic focus on serving the Medicare beneficiary population and the underutilization of IRF services in the healthcare market.

Expansion and Capacity Additions:
- Encompass Health opened 7 new hospitals and added 107 beds to existing hospitals in 2024, with plans to add 427 beds in 2025.
- The expansion is a result of strategic efforts to address the demand/supply imbalance of IRF capacity and meet the needs of an aging population.

Clinician and Operational Efficiency:
- The company implemented nursing and therapy career ladders, which improved turnover rates, with RN turnover decreasing to 20.4% from 23.1%.
- This improvement is attributed to increased compensation and opportunities for professional development, enhancing clinician retention.