Encompass Health (EHC) Q2 2025 earnings summary

Executive summary

• Net operating revenue for Q2 2025 rose 12% year-over-year to $1.46 billion, with adjusted EBITDA up 17.2% to $318.6 million and adjusted EPS up 26.1% to $1.40, driven by 7.2% discharge growth and a 4.2% increase in net revenue per discharge.

• Capacity expanded with new hospitals in Fort Myers, Daytona Beach, Athens, and Georgia, and 51–52 additional beds at existing facilities.

• Shareholder returns included increased quarterly dividends to $0.19 per share and $56.8 million in share repurchases in the first half of 2025.

• Business outlook remains positive, supported by demographic trends, strong financial position, and recognition for corporate reputation.

• Cash flows from operating activities rose 24.3% to $270.2 million, with net leverage at 2.0x.

Financial highlights

• Inpatient revenue grew 11.7% and outpatient/other revenue increased 23.2% year-over-year in Q2 2025.

• Net patient revenue per discharge rose 4.2% to $21,670, with total discharges up 7.2% and same-store discharge growth of 4.7%.

• Adjusted free cash flow for Q2 2025 was $185.9 million, up 30.5% year-over-year; year-to-date adjusted free cash flow reached $408.3 million, up 31.7%.

• Net income attributable to shareholders was $142.1 million for Q2 2025, up 24.5% year-over-year.

• $99.1 million in cash and $953 million available under revolving credit facility as of June 30, 2025.

Outlook and guidance

• 2025 guidance raised: net operating revenue of $5,880–$5,980 million, adjusted EBITDA of $1,220–$1,250 million, and adjusted EPS of $5.12–$5.34.

• Adjusted free cash flow guidance for 2025 is $705–$795 million, aided by bonus depreciation tax benefits.

• Medicare payment rates expected to increase by 2.7%–2.9% starting October 2025; managed care pricing to rise ~3%.

• Capital expenditures for 2025 projected at $785–$820 million, with $215–$225 million for maintenance.

• 8 new hospitals (7 de novo, 1 satellite) and 100–120 beds to be added in 2025.