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- **Revenue and EBITDA Growth**: Q3 revenue up 9.4% YoY, EBITDA up 11.4% to $300.1M, driven by volume and net revenue per discharge growth.
- **Strategic Expansion**: 2025 bed additions increased to 127 beds (from 110), with 2026-2027 targets raised to 150-200 beds. Small-format 24-bed hospitals planned for efficient growth.
- **Market Dominance**: 57% private room portfolio enables higher occupancy (mid-90%), outperforming industry averages. 14 announced new hospitals (690 beds) and 40+ active projects.
- **Financial Strength**: Free cash flow guidance raised to $730-810M. Share repurchases $82M YTD, dividend $0.19 declared. Net leverage 2x post $100M debt retirement.
- **Operational Excellence**: RN turnover 20.2%, below industry benchmarks. Labor costs stable, benefits inflation ~3.25%.
- **Medicare Growth**: Balanced payer mix growth (Medicare 4.4%, Medicare Advantage 4.8%, managed care 9.2%). VA Care Network volume up 26% YTD.


**【CEO Summary Section】**
- **Revenue Growth**: Q3 revenue increased 9.4% YoY, driven by a 5% rise in total discharges and 3.3% growth in net revenue per discharge. Adjusted EBITDA rose 11.4% to $300.1 million.
- **Patient Outcomes**: Discharge to community rate of 84.6%, discharge to SNF rate of 6%, and RN turnover of 20.2%, all exceeding industry averages.
- **Capacity Expansion**: Opened 3 new hospitals (40-bed in Connecticut, 50-bed in Florida) and added 39 beds. Q4 plans include 2 additional 50-bed hospitals and 37 bed additions.
- **Market Demand**: Medicare beneficiary population growing at 3% CAGR, with 77-year-old average patient age. IRF bed supply growth lags demand, underserving complex cases like stroke.
- **Pipeline**: 14 announced new hospitals (690 beds) and 40+ active projects, with 2025 bed additions increased to 127 beds (from 110) and 2026-2027 targets raised to 150-200 beds.

**【CFO Financial Commentary】**
- **Revenue and EBITDA**: GAAP net income $420 million, Non-GAAP EPS $1.08 (vs. $0.95 prior). Adjusted EBITDA up 11.4% to $300.1M, including $10.8M net provider tax revenue and $3M ERP conversion costs.
- **Cash Flow**: Q3 free cash flow $174.2M (down 8.2% YoY due to $55.8M working capital increase). Full-year guidance raised to $730-810M from $680-760M.
- **Share Repurchases**: 221,000 shares ($25M) repurchased in Q3, total $82M YTD. Dividend of $0.19 declared.
- **Leverage**: Net leverage 2x, with $100M senior notes retired in September.
- **Guidance Update**: 2025 net operating revenue $5.905-5.955B, EBITDA $1.235-1.255B, EPS $5.22-5.37.

**【Q&A Highlights】**
- **Bed Additions Strategy**: 2025-2027 bed additions increased to 127/150-200/150-200 beds, prioritizing high ROI bed expansions. Small-format 24-bed hospitals planned for efficient capacity growth.
- **Occupancy Targets**: 80%+ sustained occupancy triggers bed expansion. Private rooms (57% of portfolio) allow higher occupancy (mid-90%) vs. semi-private (under 90%).
- **Medicare Trends**: Balanced growth across Medicare (4.4%), Medicare Advantage (4.8%), and managed care (9.2%). VA Care Network volume up 26% YTD.
- **ER Conversion Impact**: ERP conversion smooth, minor bugs being resolved. No direct P&L impact, but long-term efficiency gains expected.
- **Washington Outlook**: No immediate concerns; CMS engagement positive. No impact on referral patterns from recent news.
- **2026 Outlook**: CapEx ~$580M midpoint, with bed additions driving growth. Labor costs stable, benefits inflation ~3.25%.


Encompass Health Corporation(EHC)-20251030-2025 Q3 Earnings call transcript

Revenue

Sales and Services Revenue

Financing Services Revenue

Other Revenue

Cost of Revenue

Cost of Goods and Services

Cost of Financing Services

Other Cost

Gross Profit

Other Operating Income

Operating Expenses

Selling, General and Administrative Expenses

Selling and Marketing Expenses

General and Administrative Expenses

Research and Development Expenses

Loss on Bad Debts

Loss on Impairment of Other Assets

Loss on Disposal of Assets

Other Operating Expenses

Operating Income

Non-Operating Income (Loss)

Income (Loss) from Affiliates

Income (Loss) from Associates

Income (Loss) from Joint ventures

Gain (Loss) on Other Investment

Gain (Loss) on Change in Fair Value

Gain (Loss) on Foreign Currency Exchange

Other Non-Operating Income (Loss)

Net Interest Expense

Interest Expense

Interest Income

Pretax Income From Continuing Operations

Income Tax Expense

Current Income Tax

Deferred Income Tax

Income Tax Adjustments

Net Income from Continuing Operations

Income from Discontinued Operations

Other Items Before Net Income

Net Income

Net Income Attributable to Minority Interests

Net Income Attributable to Owners of the Company

Preferred Stock Dividends

Other Adjustments

Net Income Attributable to Common Stockholders

Other Comprehensive Income

Total Comprehensive Income

Total Comprehensive Income Attributable to Minority Interests

Total Comprehensive Income Attributable to Owners of the Company

Basic EPS

Basic EPS from Continuing Operations

Basic EPS from Discontinued Operations

Diluted EPS

Diluted EPS from Continuing Operations

Diluted EPS from Discontinued Operations

EHC

EHC fundamentals

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