Encompass Raises 2026 Outlook After EBITDA Growth Accelerates

The Tip Desk · November 1, 2026 · 3 min read

Adjusted EBITDA was $346.6 million, up 15.5%, and the company lifted full-year adjusted earnings guidance to $6.23–$6.37 a share.

Encompass Health Corporation (EHC), the largest owner and operator of inpatient rehabilitation hospitals in the United States, raised its full-year 2026 outlook after adjusted EBITDA growth accelerated in the third quarter.

The company lifted full-year net operating revenue guidance to $6,450 million to $6,500 million from $6,410 million to $6,490 million, Adjusted EBITDA to $1,395 million to $1,415 million from $1,365 million to $1,395 million, and adjusted earnings per share from continuing operations attributable to Encompass Health to $6.23 to $6.37 from $6.02 to $6.25. It had already raised those ranges after the first and second quarters.

Net operating revenue for the three months ended September 30, 2026 was $1,609.5 million, up 8.9% from a year earlier. That year-over-year rate was slower than 9.6% growth in the second quarter and 9.0% in the first. Adjusted EBITDA was $346.6 million, up 15.5%, after 9.2% growth in the second quarter and 11.2% in the first. Diluted income from continuing operations attributable to Encompass Health was $1.51 a share, up 21.8%. Adjusted earnings were $1.52 a share, up 23.6%.

President and Chief Executive Officer Mark Tarr said the company was pleased with the quarter, with revenue increasing 8.9% and Adjusted EBITDA growing 15.5%.

Discharges rose 5.7% to 69,605, after 5.6% growth in the second quarter and 4.3% in the first. Same-store discharge growth was 3.0%, up from 2.8% in the second quarter and 1.6% in the first. Net patient revenue per discharge was $22,543, up 4.0%.

Cash flows provided by operating activities increased 33.7% to $362.0 million, after 4.6% growth in the second quarter and 8.5% in the first. Adjusted free cash flow rose 51.2% to $263.4 million, reversing a 4.8% decline in the second quarter and a 12.9% decline in the first.

During the first nine months of 2026, the company opened four hospitals totaling 189 beds and added 85 beds to existing hospitals, Tarr said, citing a commitment to meeting growing demand for inpatient rehabilitation services. The national footprint now includes 179 hospitals in 39 states and Puerto Rico.

For the nine months ended September 30, 2026, net operating revenues were $4,793.5 million. Income from continuing operations attributable to Encompass Health was $483.8 million, or $4.83 a share on a diluted basis. Adjusted earnings for the nine months were $4.67 a share. Net income attributable to Encompass Health for the nine months was $498.3 million, or $4.97 a share diluted, including $0.14 a share from discontinued operations.

Cash and cash equivalents were $76.2 million at September 30, 2026. Long-term debt, net of the current portion, was $2,551.3 million. For the nine months, the company issued $598.8 million of bonds, repaid $414.5 million of principal including pre-payments, borrowed $745.0 million on its revolving credit facility and repaid $800.0 million, and spent $203.7 million on common-stock repurchases. Net cash used in investing activities for the nine months was $627.3 million, primarily capital expenditures.

Tarr said the company’s value proposition and disciplined operating strategy continue to be validated and that it remains highly optimistic about the long-term prospects of the business.