Encompass Health (EHC) AI Stock Analysis

• Market Cap: $9.51B
• Dividend Yield: 0.65%
• Average Volume (3M): 999.74K
• Price to Earnings (P/E): 17.9
• Beta (1Y): 0.59
• Revenue Growth: 11.13%
• EPS Growth: 27.53%
• Country: US
• Employees: 28,572
• Sector: Healthcare
• Sector Strength: 45
• Industry: Medical - Care Facilities
• EPS (TTM): 1.23
• Shares Outstanding: 100,615,974
• 10 Day Avg. Volume: 1,052,761
• 30 Day Avg. Volume: 999,742
• PEG Ratio: 0.72
• Price to Book (P/B): 4.46
• Price to Sales (P/S): 1.72
• P/FCF Ratio: 25.61
• Enterprise Value/Market Cap: 1.27
• Enterprise Value/Revenue: 2.09
• Enterprise Value/Gross Profit: 4.78
• Enterprise Value/Ebitda: 9.03
• 1Y Price Target: N/A
• Price Target Upside: N/A
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 2
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 64 Neutral
• Price Target: $101.00 ▲(6.84% Upside)

Encompass Health's overall stock score is driven by strong earnings call performance and solid financial metrics, despite challenges in cash flow management and bearish technical indicators. The company's strategic expansions and increased guidance are positive, but liquidity issues and technical weaknesses weigh on the score.

Positive Factors

Revenue Growth

Consistent revenue and EBITDA growth indicate strong market demand and effective business strategies, supporting long-term financial health.

Strategic Expansion

New hospital projects expand service capacity and geographic reach, enhancing competitive positioning and future revenue potential.

ERP System Upgrade

Upgrading to a modern ERP system enhances operational efficiency and scalability, supporting better management and strategic decision-making.

Negative Factors

Negative Free Cash Flow

Negative free cash flow suggests potential liquidity issues, which could limit financial flexibility and investment in growth initiatives.

Volume Growth Challenges

Challenges in volume growth may hinder revenue expansion and indicate potential market saturation or operational inefficiencies.

Increased Tax Expenses

Rising tax expenses can erode profit margins, impacting overall profitability and reducing funds available for reinvestment.

Encompass Health Business Overview & Revenue Model

Company Description

Encompass Health Corporation provides facility-based and home-based post-acute healthcare services in the United States. The company operates in two segments, Inpatient Rehabilitation, and Home Health and Hospice. The Inpatient Rehabilitation segment provides specialized rehabilitative treatment on an inpatient and outpatient basis to patients who are recovering from conditions, such as stroke and other neurological disorders, cardiac and pulmonary conditions, brain and spinal cord injuries, complex orthopedic conditions, and amputations. The Home Health and Hospice segment provides home health and hospice services primarily in the Southeast and Texas. Its home health services include a range of Medicare-certified home nursing services to adult patients in need of care comprising skilled nursing, medical social work, and home health aide services, as well as physical, occupational, speech therapy, and others. This segment's hospice services comprise in-home services to terminally ill patients and their families. As of June 1, 2022, it operated 149 hospitals, 252 home health locations, and 99 hospice locations in 42 states and Puerto Rico. The company was formerly known as HealthSouth Corporation and changed its name to Encompass Health Corporation in January 2018. Encompass Health Corporation was founded in 1983 and is based in Birmingham, Alabama.

How the Company Makes Money

Encompass Health generates revenue primarily through its inpatient rehabilitation hospitals, home health services, and hospice care. The company is reimbursed by Medicare and Medicaid for a significant portion of its services, with payment models based on diagnosis-related groups (DRGs) for inpatient care. Additionally, EHC earns revenue from private insurance payers and out-of-pocket payments from patients. The company's financial performance is bolstered by strategic partnerships with healthcare providers, payers, and community organizations that facilitate patient referrals and enhance service offerings. The growing demand for post-acute care services, driven by an aging population and increasing prevalence of chronic conditions, also contributes to EHC's revenue growth.

Encompass Health Financial Statement Overview

Summary

Encompass Health shows strong revenue growth and profitability metrics, with improvements in leverage and equity utilization. However, the negative free cash flow in the TTM period raises concerns about cash management, impacting the overall financial performance score.

Income Statement

Encompass Health shows a solid performance in its income statement with a consistent revenue growth rate of 2.23% in the TTM period. The company maintains healthy gross and net profit margins, with a notable improvement in EBIT and EBITDA margins over the years. However, the gross profit margin has slightly decreased from previous years, indicating potential cost pressures.

Balance Sheet

The balance sheet reflects a strong equity position with a low debt-to-equity ratio of 0.12 in the TTM period, showing significant improvement from previous years. Return on equity remains robust at 22.68%, indicating effective use of equity capital. However, the equity ratio is moderate, suggesting a balanced asset structure.

Cash Flow

Cash flow analysis reveals challenges with a negative free cash flow growth rate of -197.79% in the TTM period, indicating potential liquidity issues. The operating cash flow to net income ratio is healthy, but the negative free cash flow is a concern. The company needs to address cash flow management to improve financial flexibility.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	5.80B	5.37B	4.80B	4.35B	4.01B	3.57B
Gross Profit	2.54B	2.23B	1.98B	1.75B	1.70B	3.40B
EBITDA	1.34B	1.19B	1.01B	870.10M	888.90M	739.60M
Net Income	541.00M	455.70M	352.00M	271.00M	412.20M	284.20M
Balance Sheet
Total Assets	6.87B	6.53B	6.10B	5.64B	6.86B	6.45B
Cash, Cash Equivalents and Short-Term Investments	48.70M	85.40M	141.80M	21.80M	49.40M	224.00M
Total Debt	2.66B	2.71B	2.93B	2.99B	3.48B	3.54B
Total Liabilities	3.68B	3.69B	3.81B	3.77B	4.47B	4.44B
Stockholders Equity	2.37B	2.07B	1.65B	1.31B	1.91B	1.59B
Cash Flow
Free Cash Flow	402.60M	360.30M	267.70M	121.70M	164.60M	296.50M
Operating Cash Flow	1.11B	1.00B	850.80M	705.80M	715.80M	704.70M
Investing Cash Flow	-728.90M	-653.30M	-602.80M	-627.00M	-666.30M	-407.50M
Financing Cash Flow	-484.70M	-330.60M	-197.20M	-145.70M	-240.10M	-145.90M

Encompass Health Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 94.53
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Positive
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For EHC, the sentiment is Negative. The current price of 94.53 is below the 20-day moving average (MA) of 100.77, below the 50-day MA of 106.39, and below the 200-day MA of 115.29, indicating a bearish trend. The MACD of -3.46 indicates Positive momentum. The RSI at 25.03 is Positive, neither overbought nor oversold. The STOCH value of 14.42 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for EHC.

Encompass Health Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
ENSG	78 Outperform	$9.94B	30.55	16.98%	0.14%	18.61%	35.76%
UHS	76 Outperform	$12.57B	9.56	19.97%	0.35%	10.21%	39.58%
THC	74 Outperform	$16.63B	12.98	34.51%	―	-0.56%	-53.50%
FMS	65 Neutral	$13.06B	16.47	5.31%	3.29%	4.09%	13.17%
EHC	64 Neutral	$9.51B	17.87	24.94%	0.65%	11.13%	27.53%
DVA	59 Neutral	$7.72B	11.26	―	―	5.14%	4.37%
Sector *	51 Neutral	$7.86B	-0.30	-43.30%	2.27%	22.53%	-2.21%

Encompass Health Corporate Events

Encompass Health Updates 2025 Financial Guidance Approach

Encompass Health has announced that it does not provide guidance on a GAAP basis for certain financial measures due to the unpredictable nature of items outside the company’s control, such as legal settlements and restructuring costs. The company has, however, provided estimable GAAP measures for 2025, including interest expenses and amortization of debt-related items, which will be included in a reconciliation for Adjusted EBITDA.

The most recent analyst rating on (EHC) stock is a Hold with a $124.00 price target. To see the full list of analyst forecasts on Encompass Health stock, see the EHC Stock Forecast page.