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Encompass Health's (EHC) Shares Up 3% on Q4 Earnings Beat
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Encompass Health Corporation’s (EHC - Free Report) shares rose 3.3% since it reported better-than-expected fourth-quarter 2022 earnings on Feb 7. The strong results stemmed from higher revenue growth resulting from patient volumes and price increases. An optimistic guidance for 2023 might have also instilled investors’ confidence in the stock.
Q4 Results
EHC reported fourth-quarter adjusted earnings per share (EPS) of 88 cents, which outpaced the Zacks Consensus Estimate by 3.5%. The bottom line climbed 31.3% year over year.
Net operating revenues of $1,137.3 million improved 9.1% year over year in the quarter under review. The top line beat the consensus mark by 1.5%.
Net patient revenues per discharge grew 2.2% year-over-year increase on the back of improved reimbursement rates. Total discharges advanced 7.3% year over year.
Encompass Health Corporation Price, Consensus and EPS Surprise
Total operating expenses of Encompass Health escalated 7.4% year over year to $957.6 million in the fourth quarter due to higher salaries and benefits, supplies and other operating costs.
Net and comprehensive income of $117.5 million inched up 1.6% year over year.
Adjusted EBITDA rose 16.4% year over year to $232.7 million in the quarter under review. The improvement can be attributed to growing revenues coupled with reduced usage of contract labor.
Financial Update (as of Dec 31, 2022)
Encompass Health exited the fourth quarter with cash and cash equivalents of $21.8 million, which plunged 55.9% from the 2021-end level. Total assets of $5,636.5 million fell 17.9% from the figure in 2021 end.
Long-term debt, net of the current portion, amounted to $2,741.8 million. The figure declined 15.4% from the figure as of Dec 31, 2021. The current portion of long-term debt came in at $25.2 million.
Total shareholders’ equity of $1,826.3 million dropped 22.5% from the 2021-end level.
In the fourth quarter, the net operating cash flows of Encompass Health climbed 39.1% year over year to $172.2 million. Adjusted free cash flow of $46 million soared 63.1% year over year.
2023 View
Management forecasts net operating revenues to lie between $4,680 million and $4,760 million, the mid-point of which indicates an improvement of 8.5% from the 2022 reported figure of $4,348.6 million.
Adjusted EBITDA is anticipated between $860 and $900 million in 2023, the mid-point of which suggests 7.4% growth from the 2022 figure of $819.3 million.
Adjusted EPS from continuing operations is estimated to lie in the range of $2.87-$3.16, the mid-point of which implies a 5.8% rise from the 2022 reported figure of $2.85.
Encompass Health intends to inaugurate eight hospitals this year. It targets to add 80-120 beds on an annual basis. In 2023, maintenance and discretionary capital expenditures are expected to stay in line with the 2022 level.
Of the Medical sector players that have reported fourth-quarter results so far, the bottom lines of Thermo Fisher Scientific Inc. (TMO - Free Report) , Molina Healthcare, Inc. (MOH - Free Report) and Humana Inc. (HUM - Free Report) beat the Zacks Consensus Estimate.
Thermo Fisher reported fourth-quarter 2022 adjusted EPS of $5.40, which beat the Zacks Consensus Estimate by 4.1%. However, the figure declined 17% year over year. Revenues in the quarter under review grossed $11.45 billion, up 6.9% year over year. The top line exceeded the Zacks Consensus Estimate by 10.6%. Organic revenues of TMO in the reported quarter declined 3% year over year, while currency translation lowered revenues by 4%.
Molina Healthcare’s fourth-quarter 2022 adjusted EPS of $4.10 beat the Zacks Consensus Estimate by a whisker. The bottom line climbed 42.4% year over year. Total revenues of $8.2 billion improved 11% year over year in the quarter under review. The top line surpassed the consensus mark by 4.6%. Premium revenues of MOH were $7.9 billion, which rose 10.5% year over year. As of Dec 31, 2022, total membership inched up 1.1% year over year to roughly 5.3 million members.
Humana reported fourth-quarter 2022 adjusted EPS of $1.62, beating the Zacks Consensus Estimate by 11%. The bottom line climbed 30.6% year over year. Revenues were $22,439 million, which rose 6.6% year over year in the quarter under review. Yet, the top line fell short of the consensus mark by a whisker. Total premiums of HUM grew 7.3% year over year to $21,275 million.
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Encompass Health's (EHC) Shares Up 3% on Q4 Earnings Beat
Encompass Health Corporation’s (EHC - Free Report) shares rose 3.3% since it reported better-than-expected fourth-quarter 2022 earnings on Feb 7. The strong results stemmed from higher revenue growth resulting from patient volumes and price increases. An optimistic guidance for 2023 might have also instilled investors’ confidence in the stock.
Q4 Results
EHC reported fourth-quarter adjusted earnings per share (EPS) of 88 cents, which outpaced the Zacks Consensus Estimate by 3.5%. The bottom line climbed 31.3% year over year.
Net operating revenues of $1,137.3 million improved 9.1% year over year in the quarter under review. The top line beat the consensus mark by 1.5%.
Net patient revenues per discharge grew 2.2% year-over-year increase on the back of improved reimbursement rates. Total discharges advanced 7.3% year over year.
Encompass Health Corporation Price, Consensus and EPS Surprise
Encompass Health Corporation price-consensus-eps-surprise-chart | Encompass Health Corporation Quote
Total operating expenses of Encompass Health escalated 7.4% year over year to $957.6 million in the fourth quarter due to higher salaries and benefits, supplies and other operating costs.
Net and comprehensive income of $117.5 million inched up 1.6% year over year.
Adjusted EBITDA rose 16.4% year over year to $232.7 million in the quarter under review. The improvement can be attributed to growing revenues coupled with reduced usage of contract labor.
Financial Update (as of Dec 31, 2022)
Encompass Health exited the fourth quarter with cash and cash equivalents of $21.8 million, which plunged 55.9% from the 2021-end level. Total assets of $5,636.5 million fell 17.9% from the figure in 2021 end.
Long-term debt, net of the current portion, amounted to $2,741.8 million. The figure declined 15.4% from the figure as of Dec 31, 2021. The current portion of long-term debt came in at $25.2 million.
Total shareholders’ equity of $1,826.3 million dropped 22.5% from the 2021-end level.
In the fourth quarter, the net operating cash flows of Encompass Health climbed 39.1% year over year to $172.2 million. Adjusted free cash flow of $46 million soared 63.1% year over year.
2023 View
Management forecasts net operating revenues to lie between $4,680 million and $4,760 million, the mid-point of which indicates an improvement of 8.5% from the 2022 reported figure of $4,348.6 million.
Adjusted EBITDA is anticipated between $860 and $900 million in 2023, the mid-point of which suggests 7.4% growth from the 2022 figure of $819.3 million.
Adjusted EPS from continuing operations is estimated to lie in the range of $2.87-$3.16, the mid-point of which implies a 5.8% rise from the 2022 reported figure of $2.85.
Encompass Health intends to inaugurate eight hospitals this year. It targets to add 80-120 beds on an annual basis. In 2023, maintenance and discretionary capital expenditures are expected to stay in line with the 2022 level.
Zacks Rank
Encompass Health currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Other Medical Sector Releases
Of the Medical sector players that have reported fourth-quarter results so far, the bottom lines of Thermo Fisher Scientific Inc. (TMO - Free Report) , Molina Healthcare, Inc. (MOH - Free Report) and Humana Inc. (HUM - Free Report) beat the Zacks Consensus Estimate.
Thermo Fisher reported fourth-quarter 2022 adjusted EPS of $5.40, which beat the Zacks Consensus Estimate by 4.1%. However, the figure declined 17% year over year. Revenues in the quarter under review grossed $11.45 billion, up 6.9% year over year. The top line exceeded the Zacks Consensus Estimate by 10.6%. Organic revenues of TMO in the reported quarter declined 3% year over year, while currency translation lowered revenues by 4%.
Molina Healthcare’s fourth-quarter 2022 adjusted EPS of $4.10 beat the Zacks Consensus Estimate by a whisker. The bottom line climbed 42.4% year over year. Total revenues of $8.2 billion improved 11% year over year in the quarter under review. The top line surpassed the consensus mark by 4.6%. Premium revenues of MOH were $7.9 billion, which rose 10.5% year over year. As of Dec 31, 2022, total membership inched up 1.1% year over year to roughly 5.3 million members.
Humana reported fourth-quarter 2022 adjusted EPS of $1.62, beating the Zacks Consensus Estimate by 11%. The bottom line climbed 30.6% year over year. Revenues were $22,439 million, which rose 6.6% year over year in the quarter under review. Yet, the top line fell short of the consensus mark by a whisker. Total premiums of HUM grew 7.3% year over year to $21,275 million.