Increases full-year guidance BIRMINGHAM, Ala., Aug. 5, 2024 /PRNewswire/ -- Encompass Health Corporation (NYSE:EHC), the largest owner and operator of inpatient rehabilitation hospitals in the United States, today reported its results of operations for the second quarter ended June 30, 2024. Summary results Growth Q2 2024 Q2 2023 Dollars Percent (In Millions, Except Per Share Data) Net operating revenue $      1,301.2 $      1,187.1 $     114.1 9.6 % Income from continuing operations attributable to      Encompass Health per diluted share 1.13 0.91 0.22 24.2 % Adjusted earnings per share 1.11 0.95 0.16 16.8 % Cash flows provided by operating activities 217.4 206.7 10.7 5.2 % Adjusted EBITDA 271.8 249.6 22.2 8.9 % Adjusted free cash flow 142.5 124.2 18.3 14.7 % (Actual Amounts) Discharges 60,833 57,011 6.7 %    Same-store discharge growth 4.8 % Net patient revenue per discharge $       20,803 $       20,387 2.0 %   See attached supplemental information for calculations of non-GAAP measures and reconciliations to their most comparable GAAP measure. "We are pleased with our second quarter performance as strong discharge growth facilitated an increase of 9.6% in revenue and 8.9% in Adjusted EBITDA," said President and Chief Executive Officer of Encompass Health Mark Tarr. "During the quarter we added 194 beds to our capacity and made continued progress across our key operating initiatives. We also resumed activity under our share repurchase authorization. We remain highly-optimistic about the long-term prospects of our business." Revenue growth of 9.6% resulted primarily from discharge growth of 6.7%, including same-store growth of 4.8%. Net revenue per discharge grew 2.0%. Cash flows provided by operating activities increased 5.2% to $217.4 million, primarily due to an increase in net income partly offset by higher cash tax payments. Adjusted EBITDA increased 8.9%, primarily from increased revenue. 2024 Guidance The Company increased its full-year guidance as follows: Full-Year 2024 Guidance Previous Guidance Updated Guidance (In Millions, Except Per Share Data) Net operating revenue $5,250 to $5,325 $5,275 to $5,350 Adjusted EBITDA $1,030 to $1,065 $1,040 to $1,075 Adjusted earnings per share from continuing operations      attributable to Encompass Health $3.86 to $4.11 $3.97 to $4.22 For considerations regarding the Company's 2024 guidance, see the supplemental information posted on the Company's website at http://investor.encompasshealth.com. See also the "Other information" section below for an explanation of why the Company does not provide guidance for comparable GAAP measures for Adjusted EBITDA and adjusted earnings per share. Earnings conference call and webcast The Company will host an investor conference call at 10:00 a.m. Eastern Time on Tuesday, August 6, 2024 to discuss its results for the second quarter of 2024. For reference during the call, the Company will post certain supplemental information at http://investor.encompasshealth.com. The conference call may be accessed by dialing 800 579-2543 and giving the conference ID EHCQ224. International callers should dial 785 424-1699 and give the same conference ID. Please call approximately ten minutes before the start of the call to ensure you are connected. The conference call will also be webcast live and will be available for on-line replay at http://investor.encompasshealth.com by clicking on an available link. About Encompass Health Encompass Health (NYSE:EHC) is the largest owner and operator of inpatient rehabilitation hospitals in the United States. With a national footprint that includes 164 hospitals in 38 states and Puerto Rico, the Company provides high-quality, compassionate rehabilitative care for patients recovering from a major injury or illness, using advanced technology and innovative treatments to maximize recovery. Encompass Health is ranked as one of Fortune's World's Most Admired Companies and Becker's Hospital Review's 150 Top Places to Work in Healthcare. For more information, visit encompasshealth.com, or follow us on our newsroom, Twitter, Instagram and Facebook. Other information The information in this press release is summarized and should be read in conjunction with the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2024 (the "June 2024 Form 10-Q"), when filed, as well as the Company's Current Report on Form 8-K filed on August 5, 2024 (the "Q2 Earnings Form 8-K"), to which this press release is attached as Exhibit 99.1. In addition, the Company will post supplemental information today on its website at http://investor.encompasshealth.com for reference during its August 6, 2024 earnings call. The financial data contained in the press release and supplemental information include non-GAAP financial measures, including the Company's adjusted earnings per share, leverage ratio, Adjusted EBITDA, and adjusted free cash flow. Reconciliations to their most comparable GAAP measure, except with regard to non-GAAP guidance, are included below or in the Q2 Earnings Form 8-K. Readers are encouraged to review the "Note Regarding Presentation of Non-GAAP Financial Measures" included in the Q2 Earnings Form 8-K which provides further explanation and disclosure regarding the Company's use of these non-GAAP financial measures. Excluding net operating revenues, the Company does not provide guidance on a GAAP basis because it is unable to predict, with reasonable certainty, the future impact of items that are deemed to be outside the control of the Company or otherwise not indicative of its ongoing operating performance. Such items include government, class action, and related settlements; professional fees—accounting, tax, and legal; mark-to-market adjustments for stock appreciation rights; gains or losses related to hedging instruments; loss on early extinguishment of debt; adjustments to its income tax provision (such as valuation allowance adjustments and settlements of income tax claims); items related to corporate and facility restructurings; and certain other items the Company believes to be not indicative of its ongoing operations. These items cannot be reasonably predicted and will depend on several factors, including industry and market conditions, and could be material to the Company's results computed in accordance with GAAP. However, the following reasonably estimable GAAP measures for 2024 would be included in a reconciliation for Adjusted EBITDA if the other reconciling GAAP measures could be reasonably predicted: Interest expense and amortization of debt discounts and fees - approximately $140 million Amortization of debt-related items - approximately $10 million The Q2 Earnings Form 8-K and, when filed, the June 2024 Form 10-Q can be found on the Company's website at http://investor.encompasshealth.com and the SEC's website at www.sec.gov. Encompass Health Corporation and Subsidiaries Condensed Consolidated Statements of Comprehensive Income (Unaudited) Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 (In Millions, Except Per Share Data) Net operating revenues $  1,301.2 $  1,187.1 $  2,617.2 $  2,347.5 Operating expenses: Salaries and benefits 700.5 636.2 1,412.1 1,265.2 Other operating expenses 189.9 172.7 393.8 350.6 Occupancy costs 14.2 14.3 28.2 28.1 Supplies 57.6 52.0 116.1 105.8 General and administrative expenses 50.5 55.4 100.7 98.8 Depreciation and amortization 72.9 72.6 143.2 136.5 Total operating expenses 1,085.6 1,003.2 2,194.1 1,985.0 Interest expense and amortization of debt discounts and fees 34.3 36.3 69.5 72.7 Other income (3.3) (2.7) (8.7) (6.3) Equity in net income of nonconsolidated affiliates (1.4) (0.9) (2.1) (1.3) Income from continuing operations before income tax expense 186.0 151.2 364.4 297.4 Provision for income tax expense 38.3 32.8 76.6 64.7 Income from continuing operations 147.7 118.4 287.8 232.7 Loss from discontinued operations, net of tax (1.2) (1.2) (2.5) (2.2) Net and comprehensive income 146.5 117.2 285.3 230.5 Less: Net and comprehensive income attributable to      noncontrolling interests (32.4) (25.8) (58.7) (51.4) Net and comprehensive income attributable to      Encompass Health $     114.1 $       91.4 $     226.6 $     179.1 Weighted average common shares outstanding: Basic 99.9 99.5 99.9 99.5 Diluted 102.0 101.1 102.1 101.0 Earnings per common share: Basic earnings per share attributable to Encompass      Health common shareholders: Continuing operations $       1.14 $       0.92 $       2.28 $       1.81 Discontinued operations (0.01) (0.01) (0.03) (0.02) Net income $       1.13 $       0.91 $       2.25 $       1.79 Diluted earnings per share attributable to Encompass      Health common shareholders: Continuing operations $       1.13 $       0.91 $       2.24 $       1.79 Discontinued operations (0.01) (0.01) (0.02) (0.02) Net income $       1.12 $       0.90 $       2.22 $       1.77 Amounts attributable to Encompass Health common      shareholders: Income from continuing operations $     115.3 $       92.6 $     229.1 $     181.3 Loss from discontinued operations, net of tax (1.2) (1.2) (2.5) (2.2) Net income attributable to Encompass Health $     114.1 $       91.4 $     226.6 $     179.1   Encompass Health Corporation and Subsidiaries Condensed Consolidated Balance Sheets (Unaudited) June 30, 2024 December 31, 2023 (In Millions) Assets Current assets: Cash and cash equivalents $             154.4 $                69.1 Restricted cash 27.7 35.1 Accounts receivable 589.7 611.6 Other current assets 166.3 126.0 Total current assets 938.1 841.8 Property and equipment, net 3,438.9 3,301.0 Operating lease right-of-use assets 216.3 208.5 Goodwill 1,284.0 1,281.3 Intangible assets, net 303.0 278.2 Other long-term assets 208.4 191.6 Total assets $          6,388.7 $           6,102.4 Liabilities and Shareholders' Equity Current liabilities: Current portion of long-term debt $               32.5 $                24.8 Current operating lease liabilities 26.6 24.1 Accounts payable 164.2 170.0 Accrued expenses and other current liabilities 471.2 437.5 Total current liabilities 694.5 656.4 Long-term debt, net of current portion 2,684.1 2,687.8 Long-term operating lease liabilities 202.0 196.1 Deferred income tax liabilities 91.2 87.0 Other long-term liabilities 186.9 177.9 Total liabilities 3,858.7 3,805.2 Commitments and contingencies Redeemable noncontrolling interests 48.6 42.0 Shareholders' equity: