Encompass Health (EHC) Unveils New Rehabilitation Hospital in No

Encompass Health (EHC, Financial) has revealed plans to construct a new 50-bed inpatient rehabilitation facility in North Las Vegas, Nevada. This hospital aims to support patients recovering from serious medical conditions such as strokes, various neurological disorders, brain and spinal cord injuries, amputations, and complex orthopedic cases. It will offer continuous nursing care along with specialized physical, occupational, and speech therapies to aid recovery and enhance quality of life.

The facility will be staffed by expert nurses, therapists, and physicians, ensuring comprehensive patient care. Features will include private rooms, a state-of-the-art therapy gym, an activities of daily living suite, and spaces for dialysis treatment, dining, pharmacy services, and outdoor therapy. Set to open by 2028, this hospital will join Encompass Health’s broad network of rehabilitation hospitals and mark its fourth location in Nevada.

Wall Street Analysts Forecast

Based on the one-year price targets offered by 12 analysts, the average target price for Encompass Health Corp (EHC, Financial) is $131.58 with a high estimate of $140.00 and a low estimate of $125.00. The average target implies an
upside of 9.88%
from the current price of $119.75. More detailed estimate data can be found on the Encompass Health Corp (EHC) Forecast page.

Based on the consensus recommendation from 13 brokerage firms, Encompass Health Corp’s (EHC, Financial) average brokerage recommendation is currently 1.5, indicating “Buy” status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.

Based on GuruFocus estimates, the estimated GF Value for Encompass Health Corp (EHC, Financial) in one year is $90.92, suggesting a
downside
of 24.08% from the current price of $119.75. GF Value is GuruFocus’ estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business’ performance. More detailed data can be found on the Encompass Health Corp (EHC) Summary page.

EHC Key Business Developments

Release Date: April 25, 2025

• Revenue: Increased 10.6% to $1.46 billion.
• Adjusted EBITDA: Increased 14.9% to $313.6 million.
• Total Discharge Growth: Increased 6.3%.
• Same Store Discharges: Grew 4.4%.
• Net Revenue per Discharge: Increased 3.9%.
• Q1 Adjusted Free Cash Flow: Increased 32.7% to $222.4 million.
• Contract Labor Costs: Declined $5 million to $28.6 million.
• Net Leverage: 2.1 times at quarter end.
• Unrestricted Cash: $95.8 million.
• 2025 Guidance – Net Operating Revenue: $5.85 billion to $5.925 billion.
• 2025 Guidance – Adjusted EBITDA: $1.185 billion to $1.220 billion.
• 2025 Guidance – Adjusted EPS: $4.85 to $5.10.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• First quarter revenues increased by 10.6% and adjusted EBITDA rose by 14.9%, indicating strong financial performance.
• Total discharge growth of 6.3% was achieved, with same-store discharges growing by 4.4%, showcasing robust operational performance.
• The company opened a new 40-bed joint venture hospital in Athens, Georgia, and plans to open six De Novos with a total of 300 beds, reflecting strategic expansion efforts.
• Encompass Health Corp (EHC, Financial) reported a decrease in premium labor costs, with contract labor costs down by $2.9 million from the previous year.
• The company increased its 2025 guidance for net operating revenue, adjusted EBITDA, and adjusted earnings per share, demonstrating confidence in future performance.

Negative Points

• Benefits expense per FTE increased by 14%, driven by an increase in the severity and frequency of group medical claims, which could impact future profitability.
• The company anticipates elevated group medical expense growth in Q2, which may affect financial results.
• Despite a decrease in contract labor costs, the company still faces challenges in maintaining labor efficiency and managing staffing levels.
• The company’s exposure to regulatory developments and potential changes in Medicare and Medicaid reimbursement rates pose risks to future financial performance.
• The high occupancy rates and demand for inpatient rehabilitation services may strain existing resources and require significant capital investment for expansion.