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

Company: Encompass Health Corp
Filing Date: 2025-08-06
Form: 10-Q
Item: Part I, Item 2
Chunk 10
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 the full current period and prior period presented. These comparisons include the financial results of market consolidation transactions and capacity expansions (including the addition of satellite and remote hospitals) in existing markets, as it is difficult to determine, with precision, the incremental impact of these transactions on our results of operations.

Net Operating Revenues

Our consolidated Net operating revenues increased during the three months ended June 30, 2025 compared to the same period of 2024 primarily due to increased volumes and favorable pricing. Discharge growth included a 4.7% increase in same-store discharges. Discharge growth from new stores during the three months ended June 30, 2025 compared to the same period of 2024 resulted from our joint ventures in Atlanta, Georgia (May 2024), Louisville, Kentucky (June 2024), Athens, Georgia (March 2025), and Fort Myers, Florida (May 2025), as well as our wholly owned hospitals in Kissimmee, Florida (May 2024), Johnston, Rhode Island (July 2024), Fort Mill, South Carolina (September 2024), and Houston, Texas (November 2024). Growth in net patient revenue per discharge during the three months ended June 30, 2025 compared to the same period of 2024 primarily resulted from increase in reimbursement rates and lower revenue reserves related to bad debt. Revenue 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 Re