(Commission File Number) | (IRS Employer Identification No.) | ||||
Written communication pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |||||
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |||||
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |||||
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
Exhibit Number | Description | |||||||
104 | Cover Page Interactive Data File - the cover page iXBRL tags are embedded within the Inline XBRL document |
ENCOMPASS HEALTH CORPORATION | ||||||||
By: | /S/ DOUGLAS E. COLTHARP | |||||||
Name: | Douglas E. Coltharp | |||||||
Title: | Executive Vice President and Chief Financial Officer |
Media Contact | April 27, 2023 | ||||
Casey Winger, 205 447-6410 | |||||
casey.winger@encompasshealth.com | |||||
Investor Relations Contact | |||||
Mark Miller, 205 970-5860 | |||||
mark.miller@encompasshealth.com |
Growth | |||||||||||||||||||||||
Q1 2023 | Q1 2022 | Dollars | Percent | ||||||||||||||||||||
(In Millions, Except Per Share Data) | |||||||||||||||||||||||
Net operating revenue | $ | 1,160.4 | $ | 1,059.3 | $ | 101.1 | 9.5 | % | |||||||||||||||
Income from continuing operations attributable to Encompass Health per diluted share | 0.88 | 0.64 | 0.24 | 37.5 | % | ||||||||||||||||||
Adjusted earnings per share | 0.88 | 0.67 | 0.21 | 31.3 | % | ||||||||||||||||||
Cash flows provided by operating activities | 227.9 | 218.9 | 9.0 | 4.1 | % | ||||||||||||||||||
Adjusted EBITDA | 229.0 | 194.9 | 34.1 | 17.5 | % | ||||||||||||||||||
Adjusted free cash flow | 158.7 | 123.2 | 35.5 | 28.8 | % | ||||||||||||||||||
(Actual Amounts) | |||||||||||||||||||||||
Discharges | 55,557 | 50,771 | 9.4 | % | |||||||||||||||||||
Same-store discharge growth | 5.9 | % | |||||||||||||||||||||
Net patient revenue per discharge | $ | 20,415 | $ | 20,409 | — | % |
1 |
Full-Year 2023 Guidance | |||||||||||
Previous Guidance | Updated Guidance | ||||||||||
(In Millions, Except Per Share Data) | |||||||||||
Net operating revenue | $4,680 to $4,760 | $4,700 to $4,770 | |||||||||
Adjusted EBITDA | $860 to $900 | $870 to $910 | |||||||||
Adjusted earnings per share from continuing operations attributable to Encompass Health | $2.87 to $3.16 | $2.94 to $3.23 |
2 |
3 |
Three Months Ended March 31, | |||||||||||
2023 | 2022 | ||||||||||
(In Millions, Except Per Share Data) | |||||||||||
Net operating revenues | $ | 1,160.4 | $ | 1,059.3 | |||||||
Operating expenses: | |||||||||||
Salaries and benefits | 629.0 | 587.4 | |||||||||
Other operating expenses | 177.9 | 159.0 | |||||||||
Occupancy costs | 13.8 | 15.4 | |||||||||
Supplies | 53.8 | 49.8 | |||||||||
General and administrative expenses | 43.4 | 37.4 | |||||||||
Depreciation and amortization | 63.9 | 57.7 | |||||||||
Total operating expenses | 981.8 | 906.7 | |||||||||
Loss on early extinguishment of debt | — | 0.3 | |||||||||
Interest expense and amortization of debt discounts and fees | 36.4 | 39.6 | |||||||||
Other (income) expense | (3.6) | 3.6 | |||||||||
Equity in net income of nonconsolidated affiliates | (0.4) | (0.9) | |||||||||
Income from continuing operations before income tax expense | 146.2 | 110.0 | |||||||||
Provision for income tax expense | 31.9 | 23.6 | |||||||||
Income from continuing operations | 114.3 | 86.4 | |||||||||
(Loss) income from discontinued operations, net of tax | (1.0) | 23.7 | |||||||||
Net and comprehensive income | 113.3 | 110.1 | |||||||||
Less: Net income attributable to noncontrolling interests included in continuing operations | (25.6) | (22.0) | |||||||||
Less: Net income attributable to noncontrolling interests included in discontinued operations | — | (0.6) | |||||||||
Less: Net and comprehensive income attributable to noncontrolling interests | (25.6) | (22.6) | |||||||||
Net and comprehensive income attributable to Encompass Health | $ | 87.7 | $ | 87.5 | |||||||
Weighted average common shares outstanding: | |||||||||||
Basic | 99.4 | 99.2 | |||||||||
Diluted | 100.9 | 100.2 | |||||||||
Earnings per common share: | |||||||||||
Basic earnings per share attributable to Encompass Health common shareholders: | |||||||||||
Continuing operations | $ | 0.89 | $ | 0.65 | |||||||
Discontinued operations | (0.01) | 0.23 | |||||||||
Net income | $ | 0.88 | $ | 0.88 | |||||||
Diluted earnings per share attributable to Encompass Health common shareholders: | |||||||||||
Continuing operations | $ | 0.88 | $ | 0.64 | |||||||
Discontinued operations | (0.01) | 0.23 | |||||||||
Net income | $ | 0.87 | $ | 0.87 | |||||||
Amounts attributable to Encompass Health common shareholders: | |||||||||||
Income from continuing operations | $ | 88.7 | $ | 64.4 | |||||||
(Loss) income from discontinued operations, net of tax | (1.0) | 23.1 | |||||||||
Net income attributable to Encompass Health | $ | 87.7 | $ | 87.5 |
4 |
March 31, 2023 | December 31, 2022 | ||||||||||
(In Millions) | |||||||||||
Assets | |||||||||||
Current assets: | |||||||||||
Cash and cash equivalents | $ | 85.0 | $ | 21.8 | |||||||
Restricted cash | 34.3 | 31.6 | |||||||||
Accounts receivable | 514.5 | 536.8 | |||||||||
Other current assets | 127.9 | 127.0 | |||||||||
Total current assets | 761.7 | 717.2 | |||||||||
Property and equipment, net | 2,988.3 | 2,939.2 | |||||||||
Operating lease right-of-use assets | 212.7 | 212.5 | |||||||||
Goodwill | 1,270.7 | 1,263.2 | |||||||||
Intangible assets, net | 287.2 | 282.3 | |||||||||
Other long-term assets | 226.7 | 222.1 | |||||||||
Total assets | $ | 5,747.3 | $ | 5,636.5 | |||||||
Liabilities and Shareholders’ Equity | |||||||||||
Current liabilities: | |||||||||||
Current portion of long-term debt | $ | 26.0 | $ | 25.2 | |||||||
Current operating lease liabilities | 26.3 | 25.6 | |||||||||
Accounts payable | 141.1 | 132.9 | |||||||||
Accrued medical insurance | 31.8 | 25.0 | |||||||||
Accrued expenses and other current liabilities | 366.9 | 367.2 | |||||||||
Total current liabilities | 592.1 | 575.9 | |||||||||
Long-term debt, net of current portion | 2,722.5 | 2,741.8 | |||||||||
Long-term operating lease liabilities | 199.2 | 199.7 | |||||||||
Deferred income tax liabilities | 87.0 | 83.0 | |||||||||
Other long-term liabilities | 183.3 | 174.2 | |||||||||
3,784.1 | 3,774.6 | ||||||||||
Commitments and contingencies | |||||||||||
Redeemable noncontrolling interests | 37.5 | 35.6 | |||||||||
Shareholders’ equity: | |||||||||||
Encompass Health shareholders’ equity | 1,383.5 | 1,310.3 | |||||||||
Noncontrolling interests | 542.2 | 516.0 | |||||||||
Total shareholders’ equity | 1,925.7 | 1,826.3 | |||||||||
Total liabilities and shareholders’ equity | $ | 5,747.3 | $ | 5,636.5 |
5 |
Three Months Ended March 31, | |||||||||||
2023 | 2022 | ||||||||||
(In Millions) | |||||||||||
Cash flows from operating activities: | |||||||||||
Net income | $ | 113.3 | $ | 110.1 | |||||||
Loss (income) from discontinued operations, net of tax | 1.0 | (23.7) | |||||||||
Adjustments to reconcile net income to net cash provided by operating activities— | |||||||||||
Depreciation and amortization | 63.9 | 57.7 | |||||||||
Stock-based compensation | 7.9 | 6.1 | |||||||||
Deferred tax expense | 4.0 | 2.3 | |||||||||
Other, net | 1.2 | 8.0 | |||||||||
Change in assets and liabilities, net of acquisitions— | |||||||||||
Accounts receivable | 23.7 | 7.5 | |||||||||
Other assets | (3.7) | 13.6 | |||||||||
Accounts payable | 1.2 | 9.4 | |||||||||
Other liabilities | 16.7 | (8.5) | |||||||||
Net cash (used in) provided by operating activities of discontinued operations | (1.3) | 36.4 | |||||||||
Total adjustments | 113.6 | 132.5 | |||||||||
Net cash provided by operating activities | 227.9 | 218.9 | |||||||||
Cash flows from investing activities: | |||||||||||
Purchases of property and equipment | (96.6) | (112.9) | |||||||||
Other, net | (7.4) | (8.8) | |||||||||
Net cash used in investing activities of discontinued operations | — | (1.4) | |||||||||
Net cash used in investing activities | (104.0) | (123.1) | |||||||||
Cash flows from financing activities: | |||||||||||
Principal payments on debt, including pre-payments | (0.6) | (103.9) | |||||||||
Borrowings on revolving credit facility | 30.0 | 130.0 | |||||||||
Payments on revolving credit facility | (45.0) | (25.0) | |||||||||
Debt amendment costs | — | (20.0) | |||||||||
Taxes paid on behalf of employees for shares withheld | (7.7) | (7.2) | |||||||||
Contributions from noncontrolling interests of consolidated affiliates | 17.0 | 14.0 | |||||||||
Dividends paid on common stock | (15.6) | (28.5) | |||||||||
Distributions paid to noncontrolling interests of consolidated affiliates | (31.8) | (20.8) | |||||||||
Other, net | (4.3) | (4.6) | |||||||||
Net cash provided by financing activities of discontinued operations | — | 5.1 | |||||||||
Net cash used in financing activities | (58.0) | (60.9) | |||||||||
Increase in cash, cash equivalents, and restricted cash | 65.9 | 34.9 | |||||||||
Cash, cash equivalents, and restricted cash at beginning of period | 53.4 | 120.3 | |||||||||
Cash, cash equivalents, and restricted cash at end of period | $ | 119.3 | $ | 155.2 | |||||||
6 |
Three Months Ended March 31, | |||||||||||
2023 | 2022 | ||||||||||
(In Millions) | |||||||||||
Reconciliation of Cash, Cash Equivalents, and Restricted Cash | |||||||||||
Cash and cash equivalents at beginning of period | $ | 21.8 | $ | 49.4 | |||||||
Restricted cash at beginning of period | 31.6 | 62.5 | |||||||||
Restricted cash included in other long-term assets at beginning of period | — | 0.4 | |||||||||
Cash, cash equivalents, and restricted cash in discontinued operations at beginning of period | — | 8.0 | |||||||||
Cash, cash equivalents, and restricted cash at beginning of period | $ | 53.4 | $ | 120.3 | |||||||
Cash and cash equivalents at end of period | $ | 85.0 | $ | 76.6 | |||||||
Restricted cash at end of period | 34.3 | 57.3 | |||||||||
Restricted cash included in other long-term assets at end of period | — | — | |||||||||
Cash, cash equivalents, and restricted cash in discontinued operations at end of period | — | 21.3 | |||||||||
Cash, cash equivalents, and restricted cash at end of period | $ | 119.3 | $ | 155.2 | |||||||
7 |
Three Months Ended March 31, | |||||||||||
2023 | 2022 | ||||||||||
(In Millions, Except Per Share Data) | |||||||||||
Adjusted EBITDA | $ | 229.0 | $ | 194.9 | |||||||
Depreciation and amortization | (63.9) | (57.7) | |||||||||
Interest expense and amortization of debt discounts and fees | (36.4) | (39.6) | |||||||||
Stock-based compensation | (7.9) | (6.1) | |||||||||
Loss on disposal or impairment of assets | (0.7) | (0.7) | |||||||||
120.1 | 90.8 | ||||||||||
Items not indicative of ongoing operating performance: | |||||||||||
Loss on early extinguishment of debt | — | (0.3) | |||||||||
Change in fair market value of equity securities | 0.5 | (2.5) | |||||||||
Pre-tax income | 120.6 | 88.0 | |||||||||
Income tax expense | (31.9) | (23.6) | |||||||||
Income from continuing operations (1) | $ | 88.7 | $ | 64.4 | |||||||
Basic shares | 99.4 | 99.2 | |||||||||
Diluted shares | 100.9 | 100.2 | |||||||||
Basic earnings per share (1) | $ | 0.89 | $ | 0.65 | |||||||
Diluted earnings per share (1) | $ | 0.88 | $ | 0.64 |
8 |
Q1 | |||||||||||
2023 | 2022 | ||||||||||
Earnings per share, as reported | $ | 0.88 | $ | 0.64 | |||||||
Adjustments, net of tax: | |||||||||||
Change in fair market value of equity securities | — | 0.02 | |||||||||
Adjusted earnings per share* | $ | 0.88 | $ | 0.67 |
9 |
Three Months Ended March 31, | |||||||||||
2023 | 2022 | ||||||||||
(In Millions) | |||||||||||
Net cash provided by operating activities | $ | 227.9 | $ | 218.9 | |||||||
Interest expense and amortization of debt discounts and fees | 36.4 | 39.6 | |||||||||
Gain (loss) on sale of investments, excluding impairments | 1.7 | (4.6) | |||||||||
Equity in net income of nonconsolidated affiliates | 0.4 | 0.9 | |||||||||
Net income attributable to noncontrolling interests in continuing operations | (25.6) | (22.0) | |||||||||
Amortization of debt-related items | (2.3) | (2.3) | |||||||||
Distributions from nonconsolidated affiliates | (0.1) | (1.0) | |||||||||
Current portion of income tax expense | 27.9 | 21.3 | |||||||||
Change in assets and liabilities | (37.9) | (22.0) | |||||||||
Cash used in (provided by) operating activities of discontinued operations | 1.3 | (36.4) | |||||||||
Change in fair market value of equity securities | (0.5) | 2.5 | |||||||||
Other | (0.2) | — | |||||||||
Adjusted EBITDA | $ | 229.0 | $ | 194.9 |
10 |
For the Three Months Ended March 31, 2023 | |||||||||||||||||||||||
Adjustments | |||||||||||||||||||||||
As Reported | Income Tax Adjustments | Change in Fair Market Value of Equity Securities | As Adjusted | ||||||||||||||||||||
(In Millions, Except Per Share Amounts) | |||||||||||||||||||||||
Adjusted EBITDA* | $ | 229.0 | $ | — | $ | — | $ | 229.0 | |||||||||||||||
Depreciation and amortization | (63.9) | — | — | (63.9) | |||||||||||||||||||
Interest expense and amortization of debt discounts and fees | (36.4) | — | — | (36.4) | |||||||||||||||||||
Stock-based compensation | (7.9) | — | — | (7.9) | |||||||||||||||||||
Loss on disposal or impairment of assets | (0.7) | — | — | (0.7) | |||||||||||||||||||
Change in fair market value of equity securities | 0.5 | — | (0.5) | — | |||||||||||||||||||
Income from continuing operations before income tax expense | 120.6 | — | (0.5) | 120.1 | |||||||||||||||||||
Provision for income tax expense | (31.9) | 0.3 | 0.1 | (31.5) | |||||||||||||||||||
Income from continuing operations attributable to Encompass Health | $ | 88.7 | $ | 0.3 | $ | (0.4) | $ | 88.6 | |||||||||||||||
Diluted earnings per share from continuing operations** | $ | 0.88 | $ | — | $ | — | $ | 0.88 | |||||||||||||||
Diluted shares used in calculation | 100.9 |
11 |
For the Three Months Ended March 31, 2022 | |||||||||||||||||||||||||||||
Adjustments | |||||||||||||||||||||||||||||
As Reported | Loss on Early Exting. of Debt | Income Tax Adjustments | Change in Fair Market Value of Equity Securities | As Adjusted | |||||||||||||||||||||||||
(In Millions, Except Per Share Amounts) | |||||||||||||||||||||||||||||
Adjusted EBITDA* | $ | 194.9 | $ | — | $ | — | $ | — | $ | 194.9 | |||||||||||||||||||
Depreciation and amortization | (57.7) | — | — | — | (57.7) | ||||||||||||||||||||||||
Interest expense and amortization of debt discounts and fees | (39.6) | — | — | — | (39.6) | ||||||||||||||||||||||||
Stock-based compensation | (6.1) | — | — | — | (6.1) | ||||||||||||||||||||||||
Loss on disposal or impairment of assets | (0.7) | — | — | — | (0.7) | ||||||||||||||||||||||||
Loss on early extinguishment of debt | (0.3) | 0.3 | — | — | — | ||||||||||||||||||||||||
Change in fair market value of equity securities | (2.5) | — | — | 2.5 | — | ||||||||||||||||||||||||
Income from continuing operations before income tax expense | 88.0 | 0.3 | — | 2.5 | 90.8 | ||||||||||||||||||||||||
Provision for income tax expense | (23.6) | (0.1) | 0.2 | (0.6) | (24.1) | ||||||||||||||||||||||||
Income from continuing operations attributable to Encompass Health | $ | 64.4 | $ | 0.2 | $ | 0.2 | $ | 1.9 | $ | 66.7 | |||||||||||||||||||
Diluted earnings per share from continuing operations** | $ | 0.64 | $ | — | $ | — | $ | 0.02 | $ | 0.67 | |||||||||||||||||||
Diluted shares used in calculation | 100.2 |
12 |
Three Months Ended March 31, | |||||||||||
2023 | 2022 | ||||||||||
(In Millions) | |||||||||||
Net income | $ | 113.3 | $ | 110.1 | |||||||
Loss (income) from discontinued operations, net of tax, attributable to Encompass Health | 1.0 | (23.7) | |||||||||
Net income attributable to noncontrolling interests included in continuing operations | (25.6) | (22.0) | |||||||||
Provision for income tax expense | 31.9 | 23.6 | |||||||||
Interest expense and amortization of debt discounts and fees | 36.4 | 39.6 | |||||||||
Depreciation and amortization | 63.9 | 57.7 | |||||||||
Loss on early extinguishment of debt | — | 0.3 | |||||||||
Loss on disposal or impairment of assets | 0.7 | 0.7 | |||||||||
Stock-based compensation | 7.9 | 6.1 | |||||||||
Change in fair market value of equity securities | (0.5) | 2.5 | |||||||||
Adjusted EBITDA | $ | 229.0 | $ | 194.9 |
13 |
Three Months Ended March 31, | |||||||||||
2023 | 2022 | ||||||||||
(In Millions) | |||||||||||
Net cash provided by operating activities | $ | 227.9 | $ | 218.9 | |||||||
Impact of discontinued operations | 1.3 | (36.4) | |||||||||
Net cash provided by operating activities of continuing operations | 229.2 | 182.5 | |||||||||
Capital expenditures for maintenance | (37.8) | (32.2) | |||||||||
Distributions paid to noncontrolling interests of consolidated affiliates | (31.8) | (20.8) | |||||||||
Items not indicative of ongoing operating performance: | |||||||||||
Transaction costs and related liabilities | (0.9) | (6.3) | |||||||||
Adjusted free cash flow | $ | 158.7 | $ | 123.2 |
14 |
15 |
16 |
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