Encompass Health Reports 10.6% Revenue Growth to $1.46 Billion in Q1 2025

Encompass Health Corporation reported a significant increase in financial performance for the first quarter of 2025, with net operating revenues reaching $1.46 billion, a 10.6% rise from $1.32 billion in the same period of 2024. The company's income from continuing operations also saw a notable increase, climbing 40.6% to $197 million compared to $140 million a year earlier. This growth was primarily driven by increased patient volumes and favorable pricing, particularly in the Medicare segment, which accounted for 67% of total revenues.

Operating expenses for the quarter increased to $1.19 billion, up 7.2% from $1.11 billion in the previous year. Salaries and benefits, which represented a significant portion of these expenses, rose by 7.1% to $762 million, reflecting both wage increases and a higher number of full-time employees due to expansion efforts. Despite the rise in expenses, the company managed to reduce the percentage of operating expenses relative to net revenues from 84.2% to 81.7%, indicating improved operational efficiency.

Strategically, Encompass Health has continued to expand its footprint, operating 167 inpatient rehabilitation hospitals across 38 states and Puerto Rico as of March 31, 2025. The company opened a new 40-bed facility in Athens, Georgia, and plans to add 25 new beds to existing hospitals. Additionally, several new hospital projects are underway, including locations in Florida, Connecticut, and Texas, which are expected to further enhance capacity and service offerings.

Operationally, the company reported a 6.3% increase in discharges, totaling 64,985 for the quarter, and a 3.9% rise in net patient revenue per discharge. The average length of stay remained stable at 12.2 days, while occupancy rates improved to 78.8%. The total employee headcount increased to 28,947, reflecting a 4.7% rise in full-time equivalents, which is essential for supporting the growing patient volumes.

Looking ahead, Encompass Health remains optimistic about its growth prospects, driven by demographic trends such as an aging population that is expected to increase demand for rehabilitation services. The company anticipates continued revenue growth, supported by its strategic investments and operational efficiencies. However, it also acknowledges the challenges posed by regulatory changes and competitive pressures in the healthcare industry, particularly concerning Medicare reimbursement policies.