3. Encompass Health Corporation (NYSE:EHC)
TTM Net Income: $399.5 Million
5-Year Net Income CAGR: 5.19%
Market Capitalization: $9.41 Billion
Number of Hedge Fund Holders: 39
Encompass Health Corporation (NYSE:EHC) is the largest operator of rehabilitation hospitals in the United States, with over 160 facilities across 38 states and Puerto Rico. The company specializes in providing high-quality, compassionate rehabilitative care for patients recovering from serious injuries or illnesses. The corporation offers a comprehensive care model that includes 24/7 nursing support, independent physician oversight, multi-disciplinary therapy, and extensive clinical support services. Encompass Health Corporation (NYSE:EHC) utilizes advanced technology and innovative treatment methods to enhance recovery.
The corporation has implemented an aggressive growth strategy to expand its reach and enhance its service offerings. In the second quarter of 2024, Encompass Health Corporation (NYSE:EHC) added 194 beds across several new and existing facilities. In July, Encompass expanded into a new state as it opened a 50-bed hospital in Johnston, Rhode Island. By the end of the year, the company aims to open two new hospitals with a total of 100 beds and add around 30 more beds to its existing facilities.
Encompass Health Corporation (NYSE:EHC), the company is also enhancing its joint venture with Piedmont Healthcare in Georgia, which now includes six operational hospitals and plans for further development.
Additionally, the corporation is undertaking a significant upgrade to its enterprise resource planning (ERP) system by transitioning to Oracle Fusion. This move aims to create a more efficient, cloud-based infrastructure that supports future growth and operational improvements.
Encompass Health Corporation (NYSE:EHC) reported a strong financial performance in the second quarter, with revenue rising by 9.6% year-over-year. This increase was driven by a 6.7% growth in discharges, including a notable 4.8% growth in same-store discharges. This marks the eighth consecutive quarter where same-store discharge growth has exceeded 4%, highlighting the company’s consistent operational strength. Additionally, adjusted EBITDA grew by 8.9%, reflecting effective management and operational efficiency.
The company also saw a significant increase in adjusted free cash flow, which rose by 14.7% year-over-year to reach $142.5 million for Q2 2024. The year-to-date total for free cash flow reached $310.1 million, demonstrating the corporation’s ability to generate strong cash flow while supporting its growth initiatives.
Over the past 5 years, Encompass Health Corporation (NYSE:EHC) has grown its net income at a compound annual growth rate (CAGR) of 5.19%.
According to Insider Monkey’s database, 39 hedge funds held stakes in Encompass Health Corporation (NYSE:EHC) in the second quarter of 2024. EHC ranks among the top 3 on our list of the most profitable mid-cap stocks to invest in.
