Encompass Health Corp (EHC)
Interest coverage
| Dec 31, 2024 | Sep 30, 2024 | Jun 30, 2024 | Mar 31, 2024 | Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) (ttm) | US$ in thousands | 876,200 | 831,700 | 793,900 | 765,800 | 740,900 | 739,400 | 704,000 | 657,700 | 619,200 | 618,100 | 646,600 | 639,200 | 705,200 | 710,900 | 712,900 | 684,900 | 657,800 | 627,400 | 645,500 | 710,200 |
| Interest expense (ttm) | US$ in thousands | 137,400 | 139,300 | 140,300 | 142,300 | 143,500 | 146,100 | 148,400 | 172,700 | 175,900 | 178,500 | 180,200 | 161,400 | 164,600 | 170,700 | 179,800 | 183,800 | 184,200 | 182,500 | 173,800 | 165,700 |
| Interest coverage | 6.38 | 5.97 | 5.66 | 5.38 | 5.16 | 5.06 | 4.74 | 3.81 | 3.52 | 3.46 | 3.59 | 3.96 | 4.28 | 4.16 | 3.96 | 3.73 | 3.57 | 3.44 | 3.71 | 4.29 |
December 31, 2024 calculation
Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $876,200K ÷ $137,400K
= 6.38
Encompass Health Corp's interest coverage ratio, which measures its ability to cover interest expenses with its operating income, has shown a fluctuating trend over the past few years. The ratio stood at 4.29 as of March 31, 2020, indicating that the company generated operating income 4.29 times larger than its interest expenses during that period.
The ratio decreased to 3.71 by June 30, 2020, but remained relatively stable around the 3.4 to 3.7 range for the rest of 2020. The trend reversed in 2021, with the ratio gradually increasing to 4.28 by December 31, 2021.
However, in the following periods up to June 30, 2022, the interest coverage ratio declined once again, reaching a low of 3.46 by September 30, 2022. The ratio improved slightly in the subsequent quarters of 2023, surpassing 5 by December 31, 2023.
From March 31, 2024, the interest coverage ratio continued to strengthen, reaching 6.38 by December 31, 2024. This upward trend indicates that Encompass Health Corp's operating income has been sufficient to cover its interest expenses more comfortably in recent periods, reflecting a positive sign of financial health and stability.
Peer comparison
Dec 31, 2024