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Jun 30, 2025
Encompass Health Q2 2025 Earnings Report
Encompass Health reported its financial and operational results for the second quarter of 2025, showing significant growth in revenue, earnings per share, and cash flow, and subsequently increased its full-year guidance.
Key Takeaways
Encompass Health demonstrated strong performance in Q2 2025 with a 12.0% increase in net operating revenue to $1,457.7 million and a 23.9% rise in diluted EPS to $1.40. The company's growth was driven by increased discharges and improved pricing, leading to a 17.2% increase in Adjusted EBITDA and a 30.5% increase in Adjusted Free Cash Flow.
Net operating revenue increased by 12.0% to $1,457.7 million in Q2 2025 compared to Q2 2024.
Diluted earnings per share from continuing operations attributable to Encompass Health grew by 23.9% to $1.40.
Adjusted EBITDA saw a significant increase of 17.2% to $318.6 million, primarily due to higher revenue and expense leverage.
The company increased its full-year 2025 guidance for net operating revenue, Adjusted EBITDA, and Adjusted earnings per share, reflecting confidence in continued strong performance.
Forward Guidance
Encompass Health increased its full-year 2025 guidance across key financial metrics, reflecting an optimistic outlook for continued growth and operational efficiency.
Positive Outlook
- Updated Net operating revenue guidance increased to $5,880 million to $5,980 million from $5,850 million to $5,925 million.
- Updated Adjusted EBITDA guidance increased to $1,220 million to $1,250 million from $1,185 million to $1,220 million.
- Updated Adjusted earnings per share from continuing operations attributable to Encompass Health increased to $5.12 to $5.34 from $4.85 to $5.10.
- The company continues to expand its capacity, opening a new 60-bed hospital and adding 26 beds to an existing hospital.
- Management expressed confidence in their clinical expertise and commitment to delivering high-quality, cost-effective care.
Challenges Ahead
- The company does not provide GAAP guidance for Adjusted EBITDA and adjusted earnings per share due to the inability to predict certain uncontrollable items.
- Potential risks include infectious disease outbreaks impacting patient volumes, staffing, and costs.
Historical Earnings Impact
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Avg. Return Before/After Earnings
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