What happened

Shares of Encompass Health (EHC 0.45%) were up more 10.8% on Tuesday after the Centers for Medicare and Medicaid Services (CMS) proposed to increase inpatient rehabilitation-facility payment rates by 3% for fiscal 2024. The company is the largest owner and operator of rehabilitation hospitals in the United States, with 156 hospitals in 37 states and Puerto Rico.

So what

The move by CMS was the biggest catalyst for Tuesday's stock jump. Encompass Health also released its full 222-page annual report on Tuesday. The company said it had $4.35 billion in revenue in 2022, up 8.3%. It reported opening nine hospitals in 2022 and plans to open eight more this year.

It also said it expects revenue to be up this year. On top of that, a Barclays (BCS -2.61%) analyst increased its target for the stock's price from $57 to $61 on Tuesday.

Encompass had previously released the fourth-quarter and full-year figures on Feb. 7.  The company said it had fourth-quarter revenue of $1.37 billion, up 9.8% year over year, and earnings per share (EPS) of $0.90, up 32.4% over the same period a year ago. Yearly EPS was listed as $2.56, down 14.4% over 2021. The company guided for 2023 revenue between $4.68 billion and $4.76 billion.

Now what

Encompass Health stock is up more than 39% so far this year. The positive news from CMS should help the company improve its profits in 2024. It has had a busy month, opening three hospitals, totaling 127 rooms, in Knoxville, Tenn.; Eau Claire, Wis.; and Owasso, Okla. -- the last one in partnership with another hospital operator.