Encompass Health saw profits plummet nearly 30% last year as it dealt with the rising labor costs and inflation besetting the healthcare sector, the inpatient rehabilitation provider reported Tuesday.
Net income for the Birmingham, Alabama-based company reached $365.9 million in 2022, compared with $517.2 million in the prior year. Revenue increased 8.3% to $4.35 billion and operating expenses grew 10.8% to $3.72 billion. Salaries and wages rose 12.5%.
Shares closed at $58.87 on Tuesday, the lowest closing price of the year to date, but among the highest over the previous 52 weeks.
Despite a shaky year, Encompass Health finished on a relatively strong note as fourth quarter net income rose 1.6% to $117.5 million. Quarterly revenue increased 9.1% to $1.14 billion, which the company attributed to volume growth and price increases. Encompass Health opened nine facilities with a total of 410 beds last year and added 87 beds to existing sites. Patient discharges increased 7.3%.
Operating expenses were 7.4% higher at $957.6 million during the fourth quarter. The company is focused on reducing contract labor costs, which weigh heavily on healthcare employers. In the fourth quarter, Encompass Health spent $35.4 million on contract labor, down 31% from the year-ago period.
The provider completed the spinoff of its home health and hospice business, Enhabit Home Health Hospice, which is now an independent publicly traded company, in July.
Encompass Health is the largest owner and operator of inpatient rehabilitation hospitals in the U.S., with 153 hospitals in 36 states and Puerto Rico. Executives will elaborate on the company's financial performance on a call with investors Wednesday.