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Encompass Health's (EHC) Q1 Earnings Beat, '23 EPS View Up
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Encompass Health Corporation (EHC - Free Report) reported first-quarter 2023 adjusted earnings per share (EPS) of 88 cents, which beat the Zacks Consensus Estimate by 25.7%. The bottom line improved 31.3% year over year.
Net operating revenues advanced 9.5% year over year to $1,160.4 million, higher than our estimate of $1,140.5 million. The top line outpaced the consensus mark by 1.2%.
Despite reporting better-than-expected results, EHC’s shares dipped 0.2% since it reported first-quarter earnings on Apr 27. An elevated expense level acted as a partial offset to its quarterly results. Nevertheless, growing patient volumes and a raised 2023 EPS outlook might provide some respite to investors.
Encompass Health Corporation Price, Consensus and EPS Surprise
Net patient revenues per discharge inched up marginally year over year in the quarter under review. Total discharges rose 9.4% year over year.
Total operating expenses came in at $981.8 million, which escalated 8.3% year over year due to higher salaries and benefits, other operating costs, and general and administrative expenses. The metric came higher than our estimate of $973.2 million.
Encompass Health reported a net and comprehensive income of $113.3 million, which grew 2.9% year over year.
Adjusted EBITDA of $229 million climbed 17.5% year over year and beat our estimate of $212.7 million. This was due to solid discharge growth and declining contract labor expense.
Financial Update (as of Mar 31, 2023)
Encompass Health exited the first quarter with cash and cash equivalents of $85 million, which increased nearly four-fold from the 2022-end level.
Total assets of $5,747.3 million increased 2% from the figure in 2022 end.
Long-term debt, net of the current portion, amounted to $2,722.5 million, down 0.7% from the figure as of Dec 31, 2022. The current portion of long-term debt came in at $26 million.
Total shareholders’ equity of $1,925.7 million rose 5.4% from the figure at 2022 end.
In the reported quarter, Encompass Health generated operating cash flows of $227.9 million, which improved 4.1% year over year. Adjusted free cash flow advanced 28.8% year over year to $158.7 million.
2023 Outlook Revised
Net operating revenues are anticipated to lie between $4,700 million and $4,770 million, up from the prior guidance of $4,680-$4,760 million. The midpoint of the revised outlook implies an improvement of 8.9% from the 2022 reported figure.
Adjusted EBITDA is forecasted within $870-$910 million this year, higher than the earlier expectation of $860-$900 million. The midpoint of the updated guidance suggests 8.6% growth from the 2022 figure.
Adjusted EPS from continuing operations is projected to lie in the $2.94-$3.23 band, up from the prior view of $2.87-$3.16. The midpoint of the revised outlook hints at an 8.2% rise from the 2022 reported figure.
Earlier, Encompass Health intended to inaugurate eight hospitals this year. Maintenance and discretionary capital expenditures were expected to stay in line with the 2022 level.
Of the Medical sector players that have reported first-quarter 2023 results so far, the bottom-line results of IDEXX Laboratories, Inc. (IDXX - Free Report) , Zimmer Biomet Holdings, Inc. (ZBH - Free Report) and Omnicell, Inc. (OMCL - Free Report) beat the respective Zacks Consensus Estimate.
IDEXX Laboratories posted first-quarter 2023 EPS of $2.55, up 12.3% year over year. The figure surpassed the Zacks Consensus Estimate by 7.1%. First-quarter revenues increased 8% year over year to $900 million. Organic growth was 10%. The metric exceeded the Zacks Consensus Estimate by 1.5%. In the first quarter, revenues in the CAG segment of IDXX rose 9% on a reported basis (up 11% organically) year over year to $827.3 million. Operating profit in the reported quarter was $280.4 million, up 12.9% year over year. The operating margin in the quarter expanded 146 bps to 31.1%.
Zimmer Biomet’s first-quarter 2023 adjusted EPS of $1.89 beat the Zacks Consensus Estimate by 13.9%. The adjusted figure improved 17.4% year over year. First-quarter net sales of $1.83 billion increased 10.1% (up 13.2% at the constant exchange rate or CER) year over year. The figure beat the Zacks Consensus Estimate by 7.6%. During the first quarter, sales generated in the United States totaled $1.06 billion (up 12.7% year over year at CER), while the same in the International segment grossed $770.6 million (up 14% year over year at CER). The adjusted operating margin of ZBH expanded 456 bps to 27.5% in the quarter.
Omnicell reported first-quarter 2023 adjusted EPS of 39 cents, down 53% year over year. However, the metric remarkably beat the Zacks Consensus Estimate of 7 cents. Revenues in the first quarter totaled $290.6 million, down 8.8% year over year. However, the figure beat the Zacks Consensus Estimate by 5%. On a segmental basis, product revenues declined 17.8% year over year to $185.7 million in the reported quarter. Service and other revenues climbed 12.9% year over year to $104.9 million. The adjusted operating margin of OMCL contracted 950 bps to 7.9%.
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Encompass Health's (EHC) Q1 Earnings Beat, '23 EPS View Up
Encompass Health Corporation (EHC - Free Report) reported first-quarter 2023 adjusted earnings per share (EPS) of 88 cents, which beat the Zacks Consensus Estimate by 25.7%. The bottom line improved 31.3% year over year.
Net operating revenues advanced 9.5% year over year to $1,160.4 million, higher than our estimate of $1,140.5 million. The top line outpaced the consensus mark by 1.2%.
Despite reporting better-than-expected results, EHC’s shares dipped 0.2% since it reported first-quarter earnings on Apr 27. An elevated expense level acted as a partial offset to its quarterly results. Nevertheless, growing patient volumes and a raised 2023 EPS outlook might provide some respite to investors.
Encompass Health Corporation Price, Consensus and EPS Surprise
Encompass Health Corporation price-consensus-eps-surprise-chart | Encompass Health Corporation Quote
Q1 Operations
Net patient revenues per discharge inched up marginally year over year in the quarter under review. Total discharges rose 9.4% year over year.
Total operating expenses came in at $981.8 million, which escalated 8.3% year over year due to higher salaries and benefits, other operating costs, and general and administrative expenses. The metric came higher than our estimate of $973.2 million.
Encompass Health reported a net and comprehensive income of $113.3 million, which grew 2.9% year over year.
Adjusted EBITDA of $229 million climbed 17.5% year over year and beat our estimate of $212.7 million. This was due to solid discharge growth and declining contract labor expense.
Financial Update (as of Mar 31, 2023)
Encompass Health exited the first quarter with cash and cash equivalents of $85 million, which increased nearly four-fold from the 2022-end level.
Total assets of $5,747.3 million increased 2% from the figure in 2022 end.
Long-term debt, net of the current portion, amounted to $2,722.5 million, down 0.7% from the figure as of Dec 31, 2022. The current portion of long-term debt came in at $26 million.
Total shareholders’ equity of $1,925.7 million rose 5.4% from the figure at 2022 end.
In the reported quarter, Encompass Health generated operating cash flows of $227.9 million, which improved 4.1% year over year. Adjusted free cash flow advanced 28.8% year over year to $158.7 million.
2023 Outlook Revised
Net operating revenues are anticipated to lie between $4,700 million and $4,770 million, up from the prior guidance of $4,680-$4,760 million. The midpoint of the revised outlook implies an improvement of 8.9% from the 2022 reported figure.
Adjusted EBITDA is forecasted within $870-$910 million this year, higher than the earlier expectation of $860-$900 million. The midpoint of the updated guidance suggests 8.6% growth from the 2022 figure.
Adjusted EPS from continuing operations is projected to lie in the $2.94-$3.23 band, up from the prior view of $2.87-$3.16. The midpoint of the revised outlook hints at an 8.2% rise from the 2022 reported figure.
Earlier, Encompass Health intended to inaugurate eight hospitals this year. Maintenance and discretionary capital expenditures were 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 first-quarter 2023 results so far, the bottom-line results of IDEXX Laboratories, Inc. (IDXX - Free Report) , Zimmer Biomet Holdings, Inc. (ZBH - Free Report) and Omnicell, Inc. (OMCL - Free Report) beat the respective Zacks Consensus Estimate.
IDEXX Laboratories posted first-quarter 2023 EPS of $2.55, up 12.3% year over year. The figure surpassed the Zacks Consensus Estimate by 7.1%. First-quarter revenues increased 8% year over year to $900 million. Organic growth was 10%. The metric exceeded the Zacks Consensus Estimate by 1.5%. In the first quarter, revenues in the CAG segment of IDXX rose 9% on a reported basis (up 11% organically) year over year to $827.3 million. Operating profit in the reported quarter was $280.4 million, up 12.9% year over year. The operating margin in the quarter expanded 146 bps to 31.1%.
Zimmer Biomet’s first-quarter 2023 adjusted EPS of $1.89 beat the Zacks Consensus Estimate by 13.9%. The adjusted figure improved 17.4% year over year. First-quarter net sales of $1.83 billion increased 10.1% (up 13.2% at the constant exchange rate or CER) year over year. The figure beat the Zacks Consensus Estimate by 7.6%. During the first quarter, sales generated in the United States totaled $1.06 billion (up 12.7% year over year at CER), while the same in the International segment grossed $770.6 million (up 14% year over year at CER). The adjusted operating margin of ZBH expanded 456 bps to 27.5% in the quarter.
Omnicell reported first-quarter 2023 adjusted EPS of 39 cents, down 53% year over year. However, the metric remarkably beat the Zacks Consensus Estimate of 7 cents. Revenues in the first quarter totaled $290.6 million, down 8.8% year over year. However, the figure beat the Zacks Consensus Estimate by 5%. On a segmental basis, product revenues declined 17.8% year over year to $185.7 million in the reported quarter. Service and other revenues climbed 12.9% year over year to $104.9 million. The adjusted operating margin of OMCL contracted 950 bps to 7.9%.