Encompass Health Corp

Encompass Health Corp. announced plans to expand inpatient rehabilitation capacity in the greater Houston area through two projects in Montgomery County, Texas: the company's first small-format inpatient rehabilitation hospital in Conroe and a replacement hospital for its existing inpatient rehabilitation hospital in The Woodlands. The 24-bed Conroe hospital will operate as a satellite location of Encompass Health Rehabilitation Hospital of The Woodlands and is expected to open in late 2027. The Conroe project marks the company's first small-format inpatient rehabilitation hospital, a new development model designed to complement its traditional hospitals and extend care into growing communities, with small-format hospitals operating in connection with an existing Encompass Health hospital. In addition, Encompass Health plans to construct a new 60-bed replacement hospital on the existing Woodlands campus, featuring all private patient rooms and enhanced amenities, with construction planned to allow the existing hospital to continue serving patients without interruption and an expected opening in 2029. Craig Funk, group president of Encompass Health's Southwest region, said the two projects demonstrate the company's commitment to both strategic growth and continued investment in the communities it serves.

Encompass Health reported second quarter results that beat expectations, prompting the company to raise its full-year guidance twice in the same release. Net operating revenue climbed 9.6% to $1.597 billion, and adjusted earnings per share rose 10.7% to $1.55. The company, the largest owner of inpatient rehabilitation hospitals in the U.S., discharged 68,895 patients, up 5.6%, with same-store discharges growing 2.8%. Management lifted full-year revenue guidance to $6.41 billion to $6.49 billion, adjusted EBITDA to $1.365 billion to $1.395 billion, and adjusted EPS to $6.02 to $6.25. The board also increased the stock repurchase authorization to $1 billion on July 23, after buying back $145.8 million of stock this year. However, adjusted free cash flow fell 4.8% to $177.0 million due to higher capital spending, and long-term debt rose to $2.598 billion from $2.447 billion at the end of 2025.

Encompass Health Corporation raised its 2026 net operating revenue forecast to between $6.41 billion and $6.49 billion and increased adjusted EPS guidance to between $6.02 and $6.25. The Zacks Consensus Estimate for 2026 earnings is $6.04 per share, up 10.8% year over year, with five upward revisions in the past 30 days and no downward revisions. Second-quarter 2026 revenue rose 9.6% year over year on 5.6% discharge growth and a 3.9% increase in net revenue per discharge, while system-wide occupancy reached 77.4%, up 290 basis points. The company opened three hospitals totaling 139 beds in the first half of 2026 and plans five more with 250 beds plus 100-150 added beds at existing facilities, with a pipeline of 13 hospitals and 606 beds beyond 2026. Risks include rising operating expenses and net debt-to-capitalization of 41.4%, above the industry average of 37.6%.

John Patrick Darby, executive vice president and general counsel of Encompass Health Corporation, sold 8,906 shares of common stock on August 10, according to an SEC Form 4 filing. The shares were sold in multiple transactions at prices ranging from $125.94 to $126.04, yielding a weighted average price of $125.95 and a total transaction value of $1.1 million. Following the sale, Darby directly holds 75,041 shares, valued at $9.44 million based on the August 10 market close of $125.81. The sale came after a strong earnings report lifted the stock, and federal regulators finalized a rule in late July lifting Medicare payments for inpatient rehabilitation by about 2.3% starting in October, which management cited when raising its outlook for the second time this year. Encompass Health reported $6.2 billion in trailing-twelve-month revenue and $621.0 million in net income, supporting a market capitalization of $12.5 billion.

Encompass Health CFO Douglas E. Coltharp sold 18,869 shares for about $2.4 million on August 10, according to an SEC filing. The sale came the same day as a much larger sale by CEO Mark Tarr, who cut about 39% of his direct stake, while Coltharp's trim was far smaller and left him with 241,000 shares worth roughly $30.4 million. Encompass Health recently reported revenue grew about 10% to $1.6 billion, raised full-year guidance for the second time this year, and boosted its dividend and buyback authorization to $1 billion. The stock jumped to near a 52-week high on those results.

Encompass Health reported better-than-expected second-quarter CY2026 results, with revenue rising 9.6% year on year to $1.60 billion, beating analyst estimates of $1.57 billion. Adjusted earnings per share came in at $1.55, surpassing the consensus estimate of $1.48 by 4.7%, while adjusted EBITDA of $348 million also topped expectations. The company raised its full-year revenue guidance to $6.45 billion at the midpoint from $6.42 billion and lifted its full-year adjusted EPS guidance to $6.14, a 2.2% increase. Same-store sales grew 2.8% year on year, and the stock jumped 7.6% to $119.19 following the announcement.

The six outpatient and specialty care stocks tracked by this publication reported a strong first quarter, with revenues beating analysts' consensus estimates by 2% and next quarter's revenue guidance coming in 5.9% above expectations. Encompass Health reported revenues of 1.59 billion dollars, up 9% year on year and exceeding estimates by 1.2%, while agilon health posted revenues of 1.42 billion dollars, down 7.3% year on year but beating estimates by 3.2% and delivering the highest guidance raise among its peers. U.S. Physical Therapy, the weakest performer, reported revenues of 198.3 million dollars, up 7.9% year on year and in line with expectations, but significantly missed analysts' EPS estimates. LifeStance Health Group recorded revenues of 403.5 million dollars, up 21.2% year on year and topping estimates by 4.2%, achieving the fastest revenue growth and biggest analyst estimate beat in the group. DaVita reported revenues of 3.42 billion dollars, up 6% year on year and surpassing estimates by 2.1%, with a beat on both EPS and full-year EPS guidance. Since their latest earnings results, share prices of these outpatient and specialty care stocks have risen 62.3% on average.

Encompass Health’s proposed $69.5 million inpatient rehabilitation facility in Branford, Connecticut received a generally favorable reception at a Planning and Zoning Commission public hearing, though the vote was continued to July 9 while officials sought more information. The facility would be built in phases, starting with 50 beds and potentially expanding to 80 beds with an additional gym area. The project still requires Certificate of Need approval from Connecticut’s Office of Health Strategy. The development highlights Encompass Health’s ongoing pursuit of capacity growth in specialized post-acute care.

Encompass Health is accelerating its capacity expansion to meet growing demand for inpatient rehabilitation services, moving to launch projects before facilities reach full occupancy. In the first quarter of 2026, the company opened a new 49-bed hospital in South Carolina and added 44 beds to existing locations, with plans to open eight more hospitals and add about 175 beds by year-end. First-quarter revenues rose 9% and adjusted EBITDA increased 11.2%, leading management to raise 2026 adjusted EPS guidance to $5.89-$6.11 from $5.81-$6.10. The company has 11 additional hospitals in its development pipeline and will introduce a smaller hospital design in 2027 for crowded, fast-growing markets. Shares have lost 4.5% year to date, and the stock trades at a forward price-to-earnings ratio of 16.33 times, below the industry average of 18.08 times.