Q4 2023 Earnings Summary
Reported on Feb 18, 2025 (After Market Close)
Pre-Earnings Price$15.35Last close (Feb 23, 2024)
Post-Earnings Price$15.35Last close (Feb 23, 2024)
Price Change
$0.00(0.00%)
- Strong performance and growth in Inpatient Rehab and Concentra divisions: The company expects continued revenue and EBITDA growth in both the Inpatient Rehab and Concentra divisions, which are performing "quite well" despite headwinds in other areas.
- Robust development pipeline in Inpatient Rehab with minimal margin impact: The company plans to add 533 rehab beds in 2024 through partnerships with large acute care systems, while maintaining impressive margins in the Inpatient Rehab business without compromising growth rates.
- Improvement in labor costs and staffing levels returning to pre-pandemic norms: The company has reduced reliance on agency nursing to 13%-14%, down from historical levels of 15%-18%, and staffing has returned to pre-pandemic levels, which should lead to improved margins as volumes increase.
- The impending expiration of interest rate caps in September 2024 is expected to increase interest expense by approximately $20 million in the fourth quarter, leading to a $0.12 reduction in EPS, with limited options to mitigate this impact.
- The outpatient rehabilitation segment is facing pressures due to Medicare cuts, leading to muted growth and margin compression. The company expects margins in this segment to return to target levels only in the next 2–3 years.
- The critical illness recovery hospital division is experiencing headwinds related to high-cost outlier payments, and the recent increase in volumes may not be sustainable as they are influenced by seasonal factors such as the winter months.