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Encompass Health (EHC) Down 10.6% Since Last Earnings Report: Can It Rebound?
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A month has gone by since the last earnings report for Encompass Health (EHC - Free Report) . Shares have lost about 10.6% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Encompass Health due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Encompass Health Q2 Earnings Miss Estimates, Revenues Beat
Encompass Health’s earnings of 31 cents per share missed the Zacks Consensus Estimate by 20.5% and declined 71.3% year over year. This year-over-year downside was due to lower revenues and rise in expenses.
Revenues of $1.1 billion beat the Zacks Consensus Estimate by 1.1% but plunged 5.4% year over year. Decline in the top line was due to lower volumes in the inpatient rehabilitation segment and home health and hospice segment.
Adjusted EBITDA of $162.2 million was down 35.7% year over year.
Segment Results
Inpatient rehabilitation segment’s revenues of $824.5 million were down 5.7% year over year, due to 5.1% lower revenues from Inpatient business and 25.3% decline in revenues from Outpatient and other business.
Adjusted EBITDA of $180.3 million decreased 22.9% year over year due to adverse impacts on patient volumes, staff productivity and medical supplies due to the pandemic.
Home Health and Hospice segment’s revenues of $249.6 million were down 4.4% year over year, due to 9.4% lower revenues from Home Health sub-segment partly mitigated by 24.5% growth in Hospice sub-segment.
Adjusted EBITDA of $15 million was down 69.5% year over year due to lower reimbursement rates under PDGM and higher administrative costs.
Financial Update
During the first half of 2020, adjusted free cash flow of $242.8 million declined 10% year over year.
As of Jun 30, 2020, the company had almost $419 million in cash and roughly $964 million available to it under its $1 billion revolving credit facility. The company's leverage ratio at the end of the second quarter of 2020 was 4.2x.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates. The consensus estimate has shifted 7.65% due to these changes.
VGM Scores
At this time, Encompass Health has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Encompass Health has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Encompass Health (EHC) Down 10.6% Since Last Earnings Report: Can It Rebound?
A month has gone by since the last earnings report for Encompass Health (EHC - Free Report) . Shares have lost about 10.6% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Encompass Health due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Encompass Health Q2 Earnings Miss Estimates, Revenues Beat
Encompass Health’s earnings of 31 cents per share missed the Zacks Consensus Estimate by 20.5% and declined 71.3% year over year. This year-over-year downside was due to lower revenues and rise in expenses.
Revenues of $1.1 billion beat the Zacks Consensus Estimate by 1.1% but plunged 5.4% year over year. Decline in the top line was due to lower volumes in the inpatient rehabilitation segment and home health and hospice segment.
Adjusted EBITDA of $162.2 million was down 35.7% year over year.
Segment Results
Inpatient rehabilitation segment’s revenues of $824.5 million were down 5.7% year over year, due to 5.1% lower revenues from Inpatient business and 25.3% decline in revenues from Outpatient and other business.
Adjusted EBITDA of $180.3 million decreased 22.9% year over year due to adverse impacts on patient volumes, staff productivity and medical supplies due to the pandemic.
Home Health and Hospice segment’s revenues of $249.6 million were down 4.4% year over year, due to 9.4% lower revenues from Home Health sub-segment partly mitigated by 24.5% growth in Hospice sub-segment.
Adjusted EBITDA of $15 million was down 69.5% year over year due to lower reimbursement rates under PDGM and higher administrative costs.
Financial Update
During the first half of 2020, adjusted free cash flow of $242.8 million declined 10% year over year.
As of Jun 30, 2020, the company had almost $419 million in cash and roughly $964 million available to it under its $1 billion revolving credit facility. The company's leverage ratio at the end of the second quarter of 2020 was 4.2x.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates. The consensus estimate has shifted 7.65% due to these changes.
VGM Scores
At this time, Encompass Health has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Encompass Health has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.