Company: EHC
Filing Date: 2025-08-06
Form Type: 10-Q
Source: 0000785161-25-000052
Chunk: 70

Company: Encompass Health Corp
Filing Date: 2025-08-06
Form: 10-Q
Item: Part I, Item 1
Chunk 70
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 reserves related to bad debt as a percentage of Net operating revenues decreased during the three months ended June 30, 2025 to 2.0% from 2.9% during the three months ended June 30, 2024 primarily due to a decrease in medical necessity claim review audits.

Growth in revenues, discharges, and net patient revenue per discharge during the six months ended June 30, 2025 were impacted primarily by the same factors as discussed above for the second quarter of 2025. Discharge growth included a 4.5% increase in same-store discharges.

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The increase in outpatient and other revenue during the three and six months ended June 30, 2025 included an increase of $8.5 million and $13.8 million, respectively, in Medicaid supplemental payments (offset by an increase of $9.3 million and $16.4 million, respectively, in provider tax expenses included in Other operating expenses). Medicaid supplemental payments represent amounts received under state directed and supplemental payment programs associated with Medicaid. For additional information, see Item 1, Business, “Medicaid Reimbursement,” of the 2024 Form 10‑K.

Salaries and Benefits

Salaries and benefits increased during the three and six months ended June 30, 2025 compared to the same periods of 2024 primarily due to salary and benefit cost increases for our employees and increased patient volumes, including an increase in the number of full-time equivalents as a result of our development activities. Salaries and benefits decreased as a percent of Net operating revenues during the three and six months ended June 30, 2025 compared to the same periods of 2024 primarily due a decline in EPOB and decreases in both contract labor and sign-on and shift bonuses.

Other Operating Expenses

Other operating expenses increased in terms of dollars and as a percent of Net operating revenues during the three months ended June 30, 2025 compared to the same period of 2024 primarily due to increased provider taxes and higher costs resulting from our development activities.

Other operating expenses increased during the six months ended June 30, 2025 compared to the same period of 2024 primarily due to increased provider taxes and higher costs resulting from our development activities. Other operating expenses during the six months ended June 30, 2024 also included a $10.4 million impairment charge related to the closure of our joint venture inpatient rehabilitation hospital in Eau Claire, Wisconsin. In January 2024