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Encompass Health
(NYSE:EHC)
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Rating:77Outperform
Price Target:
$140.00
▲(24.01% Upside)
Action:Reiterated
Date:08/17/26
The score is driven primarily by solid underlying financial performance (growth, profitability, ROE, and improving leverage) and a notably strong earnings update with raised 2026 guidance. Technicals also add support given strong trend and positive momentum. The main offsets are only moderate valuation support (low dividend yield) and recent cash-conversion/consistency flags in the TTM financials.
Positive Factors
Sustained Revenue and Earnings Growth
Strong volume, pricing and earnings growth, alongside raised full-year guidance, indicate durable operating momentum. Continued expansion in patient activity and revenue per discharge can support growth over the next several quarters.
Negative Factors
Medicare Advantage Denial Friction
Persistent Medicare Advantage denials can delay admissions, increase administrative workload and create reimbursement uncertainty. Even successful appeals may require additional resources, limiting conversion of demand into timely, profitable care.
Read all positive and negative factors
Positive Factors
Negative Factors
Sustained Revenue and Earnings Growth
Strong volume, pricing and earnings growth, alongside raised full-year guidance, indicate durable operating momentum. Continued expansion in patient activity and revenue per discharge can support growth over the next several quarters.
Read all positive factors
Encompass Health Key Performance Indicators (KPIs)
Any
Number of Hospitals
Indicates the scale and reach of the company's healthcare network, which can impact patient access, market presence, and potential for revenue growth.
Indicates the scale and reach of the company's healthcare network, which can impact patient access, market presence, and potential for revenue growth.
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The Fly
The FlyEncompass Health (EHC) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$12.05B
Dividend Yield0.62%
Average Volume (3M)1.06M
Price to Earnings (P/E)19.6
Beta (1Y)0.63
Revenue Growth9.47%
EPS Growth19.85%
CountryUS
Employees29,699
SectorHealthcare
Sector Strength45
IndustryMedical - Care Facilities
Share Statistics
EPS (TTM)6.22
Shares Outstanding98,653,380
10 Day Avg. Volume899,771
30 Day Avg. Volume1,064,202
Financial Highlights & Ratios
PEG Ratio0.78
Price to Book (P/B)4.37
Price to Sales (P/S)1.80
P/FCF Ratio24.29
Enterprise Value/Market Cap<0.01
Enterprise Value/Revenue<0.01
Enterprise Value/Gross Profit<0.01
Enterprise Value/Ebitda<0.01
Forecast
1Y Price Target
$147.43Price Target Upside30.59% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering9
EPS Forecast (FY)6.1
Revenue Forecast (FY)$6.46B
Encompass Health Business Overview & Revenue Model
Company Description
Encompass Health Corporation delivers a range of post-acute healthcare services across the United States, offered both in dedicated facilities and directly within patients' homes. The company's operations are divided into two primary divisions: In...
How the Company Makes Money
Encompass Health primarily makes money by providing post-acute healthcare services and collecting reimbursement from third-party payors, with revenue largely derived from patient care. The company’s major revenue stream is inpatient rehabilitation...
Encompass Health Earnings Call Summary
Earnings Call Date:Aug 05, 2026
(Q2-2026)
| % Change Since: |
Next Earnings Date:Oct 28, 2026
Earnings Call Sentiment Positive
The call conveyed a predominantly positive operational and financial story: strong top-line and EPS growth, raised 2026 guidance, improving occupancy and de novo ramp economics, meaningful workforce improvements driving retention and quality, successful capital-return actions (dividend increase and repurchase authorization), and a favorable CMS pricing rule offsetting some pressures. Key challenges include a retroactive Florida net provider tax adjustment (~$11M adverse impact), higher SWB and preopening costs, persistent Medicare Advantage denial friction, and increased CapEx intensity. Overall, the positives (revenue/EBITDA/EPS growth, guidance raise, quality metrics, pipeline, and successful workforce initiatives) materially outweigh the manageable negatives described.Positive Updates
Top-Line and Profitability Growth
Q2 revenue grew 9.6% year-over-year; adjusted EBITDA increased 9.2% to $348 million; adjusted EPS rose 10.7%.
Negative Updates
Net Provider Tax Retroactive Adjustment
Q2 absorbed an $11.5M year-over-year decrease in net provider tax impact related to out-of-period Florida Medicaid accrual revisions; full-year 2026 net benefit to adjusted EBITDA now expected to be ~$10M versus prior ~ $21M (roughly $11M negative swing).
Read all updates
Q2-2026 Updates
Positive
Negative
Top-Line and Profitability Growth
Q2 revenue grew 9.6% year-over-year; adjusted EBITDA increased 9.2% to $348 million; adjusted EPS rose 10.7%.
Read all positive updates
Company Guidance
Encompass Health raised 2026 guidance, now expecting net operating revenue of $6.41–$6.49 billion, adjusted EBITDA of $1.365–$1.395 billion and adjusted EPS of $6.02–$6.25; the raise was driven by strong Q2 results (revenue +9.6%, adjusted EBITDA +9.2% to $348 million, adjusted EPS +10.7%) and Q2 drivers including 5.6% discharge growth and a 3.9% increase in net revenue per discharge. Updated guidance assumptions include a Q4 Medicare pricing lift of ~2.3% tied to the July 30 IRF final rule (about a 2.3% increase in Medicare net revenue per discharge beginning Oct. 1 on current mix), full‑year SWB per FTE growth of 3.5%–4.0%, an expected 2026 net provider tax benefit to adjusted EBITDA of roughly $10 million (down from prior ~$21 million), and full‑year net preopening/ramp‑up costs of $18–$22 million; financial actions noted alongside guidance include Q2 repurchases of ~704,000 shares for $74.2 million (YTD ~1,412,000 shares/$145.8 million), an increased $1 billion share repurchase authorization, a raised quarterly dividend to $0.21, issuance of $500 million of 5.875% notes due 2034 and redemption of $400 million of 4.5% notes due 2028, and net leverage of 1.9x.Encompass Health Financial Statement Overview
Summary
Income Statement
74
Positive
Balance Sheet
72
Positive
Cash Flow
67
Positive
| Breakdown | TTM | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 6.21B | 5.94B | 5.37B | 4.80B | 4.35B | 4.01B |
| Gross Profit | 4.54B | 5.68B | 2.23B | 1.98B | 1.75B | 1.70B |
| EBITDA | 1.50B | 1.40B | 1.19B | 1.01B | 870.10M | 888.90M |
| Net Income | 621.00M | 566.20M | 455.70M | 352.00M | 271.00M | 412.20M |
Balance Sheet | ||||||
| Total Assets | 7.46B | 7.09B | 6.53B | 6.10B | 5.64B | 6.86B |
| Cash, Cash Equivalents and Short-Term Investments | 107.70M | 145.10M | 85.40M | 141.80M | 21.80M | 49.40M |
| Total Debt | 2.84B | 2.71B | 2.71B | 2.93B | 2.99B | 3.48B |
| Total Liabilities | 4.00B | 3.81B | 3.69B | 3.81B | 3.77B | 4.47B |
| Stockholders Equity | 2.60B | 2.44B | 2.07B | 1.65B | 1.31B | 1.91B |
Cash Flow | ||||||
| Free Cash Flow | 413.40M | 439.20M | 360.30M | 267.70M | 121.70M | 164.60M |
| Operating Cash Flow | 1.21B | 1.18B | 1.00B | 850.80M | 705.80M | 715.80M |
| Investing Cash Flow | -824.60M | -762.80M | -653.30M | -602.80M | -627.00M | -666.30M |
| Financing Cash Flow | -391.80M | -433.00M | -330.60M | -197.20M | -145.70M | -240.10M |
Encompass Health Technical Analysis
Positive
112.89
Price Trends
110.32
Positive
107.08
Positive
106.55
Positive
Market Momentum
3.75
Positive
62.55
Neutral
38.00
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For EHC, the sentiment is Positive. The current price of 112.89 is below the 20-day moving average (MA) of 118.13, above the 50-day MA of 110.32, and above the 200-day MA of 106.55, indicating a bullish trend. The MACD of 3.75 indicates Positive momentum. The RSI at 62.55 is Neutral, neither overbought nor oversold. The STOCH value of 38.00 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for EHC.
Encompass Health Risk Analysis
Encompass Health disclosed 31 risk factors in its most recent earnings report. Encompass Health reported the most risks in the "Legal & Regulatory" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Encompass Health Peers Comparison
UnderperformOutperform
Sector (51)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
77 Outperform | $12.05B | 19.57 | 25.01% | 0.67% | 9.47% | 19.85% | |
73 Outperform | $10.64B | 27.78 | 16.53% | 0.15% | 18.89% | 15.48% | |
72 Outperform | $10.20B | 6.99 | 20.66% | 0.51% | 10.05% | 28.53% | |
70 Outperform | $21.76B | 10.28 | 50.63% | ― | 5.43% | 65.86% | |
65 Neutral | $12.64B | 12.33 | 7.21% | 3.52% | 6.76% | 57.96% | |
60 Neutral | $11.35B | 15.24 | -123.56% | ― | 6.45% | 16.30% | |
51 Neutral | $7.86B | -0.30 | -43.30% | 2.27% | 22.53% | -2.21% |
* Healthcare Sector Average
EHC
Encompass Health
120.91
-1.64
-1.34%
DVA
DaVita
175.24
37.66
27.37%
FMS
Fresenius Medical Care
23.43
-1.14
-4.65%
THC
Tenet Healthcare
272.60
95.21
53.67%
ENSG
The Ensign Group
179.85
10.86
6.43%
UHS
Universal Health
172.87
-10.29
-5.62%
Encompass Health Corporate Events
Business Operations and StrategyPrivate Placements and Financing
Encompass Health Adds 2034 Senior Notes, Refinances Credit Facility
Positive
Aug 13, 2026
On August 13, 2026, Encompass Health Corporation completed a private issuance and sale of $100 million in 5.875% Senior Notes due 2034, priced at 98.75% of par and guaranteed by certain subsidiaries. After discounts and estimated expenses, the com...
Business Operations and StrategyStock BuybackFinancial Disclosures
Encompass Health Raises 2026 Outlook, Expands Buyback Plan
Positive
Aug 5, 2026
For the second quarter ended June 30, 2026, Encompass Health reported net operating revenue of $1.60 billion, up 9.6% year over year, supported by a 5.6% rise in discharges and a 3.9% increase in net patient revenue per discharge. Diluted income f...
Business Operations and StrategyPrivate Placements and Financing
Encompass Health Completes $500 Million Senior Notes Offering
Positive
Jun 1, 2026
On May 29, 2026, Encompass Health completed a $500 million private issuance of 5.875% senior notes due 2034, guaranteed on a senior unsecured basis by certain subsidiaries and governed by an indenture with Computershare as trustee. The notes rank ...
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.