Encompass Health Closes Out 2024 with a Bang: Record-Breaking Quarter Marks Significant Advancement in Strategic Positioning
Encompass Health, the leading provider of inpatient rehabilitation services, has closed out 2024 on a high note, posting a record-breaking quarter that exceeded expectations. In its latest conference call, the company highlighted several key achievements that demonstrate its continued commitment to delivering exceptional care and value to patients, payers, and partners.
The Q4 results were nothing short of impressive, with revenue increasing by 12.7%, adjusted EBITDA up 13.6%, adjusted EPS growing by 23.2%, and adjusted free cash flow soaring by a remarkable 103.7%. Total discharge growth for the quarter was 7.8%, underscoring the company's broad-based volume growth and strong financial performance.
Mark Tarr, Encompass Health's President and Chief Executive Officer, emphasized that the company's primary focus remains on serving the Medicare beneficiary population, which has been growing consistently at a CAGR of approximately 3%. As a result, there is a significant demand for treatment of complex medical conditions such as stroke, necessitating IRF care intensity. Unfortunately, access to this care is often denied due to an imbalance in IRF capacity and ill-informed pre-authorization requirements by Medicare Advantage plans.
However, Encompass Health is well-positioned to address this issue, with the clinical expertise to successfully treat medically complex patients. The company's discharge to community rate was a commendable 83.6%, up nearly 200 basis points from 2022. This not only benefits patients but also reduces unnecessary patient days in acute care hospitals, making Encompass Health an attractive partner for these institutions.
One of the key highlights of the quarter was the growth in same-store discharge, which was 5.8%. Additionally, the company's strategic positioning has led to significant advancements, with 65 of its 166 hospitals operated as joint ventures. This demonstrates Encompass Health's ability to scale and better serve patients in need of inpatient rehabilitation services.
As the population continues to age, there is expected to be an increased demand for IRF care intensity. By 2030, it is estimated that more than 70 million people will be aged 65 or older, with the population in the Medicare patient age range of 75-79 growing at approximately 5%. Encompass Health is poised to capitalize on this trend and continue its growth trajectory.
