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Encompass Health Corporation (EHC - Free Report) reported first-quarter adjusted earnings per share (EPS) of $1.60, which beat the Zacks Consensus Estimate by 6%. The bottom line increased 16.8% year over year.
Net operating revenues of $1.6 billion improved 9.1% year over year. The top line marginally beat the consensus mark by 1%.
The robust results were primarily driven by strong growth in net patient revenue per discharge and higher adjusted EBITDA, supported by solid discharge volumes and contributions from capacity expansion. However, the upside was partly offset by elevated operating expenses, particularly higher salaries, benefits, and general administrative costs.
Encompass Health Corporation Price, Consensus and EPS Surprise
EHC’s net patient revenue per discharge rose 3.7% year over year and beat the Zacks Consensus Estimate by 1.5%. Total discharges grew 4.3% year over year to 67,763, but missed the consensus estimate by 1.4%.
Total operating expenses of $1.3 billion escalated 8.1% year over year due to elevated salaries, benefits, other operating and general & administrative expenses. The figure marginally missed our estimate by 0.3%.
Net income climbed 26.3% year over year to $248.2 million in the first quarter.
Adjusted EBITDA of $348.8 million grew 11.2% year over year and surpassed our estimate of $338.2 million.
In the first quarter, Encompass Health opened a new 49-bed hospital in Irmo, SC, and added 44 beds across its existing hospitals.
Financial Update (as of March 31, 2026)
Encompass Health exited the first quarter with cash and cash equivalents of $110.5 million, which rose 53% from the 2025-end level.
Total assets of $7.3 billion increased 3.2% from the 2025-end level.
Long-term debt, net of the current portion, amounted to $2.5 billion, which increased 3.4% from that recorded as of Dec. 31, 2025. The current portion of long-term debt totaled $42.9 million.
Total shareholders’ equity of $3.3 billion improved 2.8% from the 2025-end figure.
EHC generated $313.1 million of net cash from operations in the first quarter, which improved 8.5% from the prior-year figure. Adjusted free cash flow decreased 12.9% to $193.8 million for the period.
Capital Deployment Update
Encompass Health bought back 0.7 million shares worth $71.6 million in the first quarter of 2026. As of Dec. 31, 2025, the company had a leftover capacity of around $261 million under its buyback authorization. Management paid out a quarterly cash dividend of 19 cents per share.
2026 Outlook
Net operating revenues are now expected to be between $6.375 billion and $6.470 billion, up from the earlier projection of $6.365-$6.465 billion. This reflected growth over the 2025 reported figure of $5.94 billion.
Adjusted EBITDA is now expected to range between $1.35 billion and $1.38 billion, up from $1.27 billion in 2025. The prior guidance was $1.34-$1.38 billion for the metric.
Adjusted EPS from continuing operations is projected to be between $5.89 and $6.11, reflecting an increase from $5.45 in 2025. The earlier guidance for the metric was $5.81-$6.10.
Adjusted free cash flow is presently forecasted to be $760-$875 million, down from the earlier guidance of $765-$890 million. Maintenance capex is expected to remain in the range of $225-$240 million.
The company expects to open eight de novo hospitals, adding a total of 389 beds. It plans to add 150 to 200 beds to its existing hospitals. It also expects to open freestanding hospitals, including remote and satellite locations, with more than 30 beds beginning in 2026.
Growth Targets Reaffirmed
Over the 2023-2027 period, management aims to inaugurate six to 10 de novos each year, as well as make bed additions in the range of 80-120 every year. It also expects a CAGR of 6-8% in discharges in the same time frame.
Here are some stocks from the broader Medical space that have also reported their quarterly results: HCA Healthcare, Inc. (HCA - Free Report) , The Ensign Group, Inc. (ENSG - Free Report) and Tenet Healthcare Corporation (THC - Free Report) .
HCA Healthcare reported first-quarter 2026 adjusted earnings per share of $7.15, slightly below the Zacks Consensus Estimate of $7.17, though up 10.9% year over year. Revenues increased 4.3% to $19.1 billion but narrowly missed the consensus estimate by 0.1%. HCA’s performance was affected by declines in same-facility inpatient and outpatient surgeries, along with elevated operating expenses, partially offset by modest growth in emergency room visits.
Ensign Group reported a first-quarter 2026 adjusted EPS of $1.85, which beat the Zacks Consensus Estimate by 3.4%. The bottom line improved 21.7% year over year. Operating revenues advanced 18.4% year over year to $1.4 billion. The top line marginally missed the consensus mark by 0.07%. ENSG’s strong performance was driven by higher occupancy, patient days and contributions from newly acquired and transitioning facilities, along with growth in rental income. However, these gains were partly offset by increased expenses.
Tenet Healthcare reported first-quarter 2026 adjusted earnings per share of $4.82, which surpassed the Zacks Consensus Estimate by 14.5%. The bottom line increased 10.6% year over year. Net operating revenues advanced 2.8% year over year to $5.37 billion. The top line marginally missed the consensus mark by 0.4%. THC’s quarterly performance was driven by strong same-facility revenue growth, higher adjusted admissions, and solid contributions from acquisitions that supported the Ambulatory Care segment. However, these gains were partially offset by an unfavorable payer mix and increased operating costs, particularly higher supply expenses.
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Encompass Health Q1 EPS Tops, Revenues Climb on Solid Discharges
Key Takeaways
Encompass Health Corporation (EHC - Free Report) reported first-quarter adjusted earnings per share (EPS) of $1.60, which beat the Zacks Consensus Estimate by 6%. The bottom line increased 16.8% year over year.
Net operating revenues of $1.6 billion improved 9.1% year over year. The top line marginally beat the consensus mark by 1%.
The robust results were primarily driven by strong growth in net patient revenue per discharge and higher adjusted EBITDA, supported by solid discharge volumes and contributions from capacity expansion. However, the upside was partly offset by elevated operating expenses, particularly higher salaries, benefits, and general administrative costs.
Encompass Health Corporation Price, Consensus and EPS Surprise
Encompass Health Corporation price-consensus-eps-surprise-chart | Encompass Health Corporation Quote
Q1 Operations
EHC’s net patient revenue per discharge rose 3.7% year over year and beat the Zacks Consensus Estimate by 1.5%. Total discharges grew 4.3% year over year to 67,763, but missed the consensus estimate by 1.4%.
Total operating expenses of $1.3 billion escalated 8.1% year over year due to elevated salaries, benefits, other operating and general & administrative expenses. The figure marginally missed our estimate by 0.3%.
Net income climbed 26.3% year over year to $248.2 million in the first quarter.
Adjusted EBITDA of $348.8 million grew 11.2% year over year and surpassed our estimate of $338.2 million.
In the first quarter, Encompass Health opened a new 49-bed hospital in Irmo, SC, and added 44 beds across its existing hospitals.
Financial Update (as of March 31, 2026)
Encompass Health exited the first quarter with cash and cash equivalents of $110.5 million, which rose 53% from the 2025-end level.
Total assets of $7.3 billion increased 3.2% from the 2025-end level.
Long-term debt, net of the current portion, amounted to $2.5 billion, which increased 3.4% from that recorded as of Dec. 31, 2025. The current portion of long-term debt totaled $42.9 million.
Total shareholders’ equity of $3.3 billion improved 2.8% from the 2025-end figure.
EHC generated $313.1 million of net cash from operations in the first quarter, which improved 8.5% from the prior-year figure. Adjusted free cash flow decreased 12.9% to $193.8 million for the period.
Capital Deployment Update
Encompass Health bought back 0.7 million shares worth $71.6 million in the first quarter of 2026. As of Dec. 31, 2025, the company had a leftover capacity of around $261 million under its buyback authorization. Management paid out a quarterly cash dividend of 19 cents per share.
2026 Outlook
Net operating revenues are now expected to be between $6.375 billion and $6.470 billion, up from the earlier projection of $6.365-$6.465 billion. This reflected growth over the 2025 reported figure of $5.94 billion.
Adjusted EBITDA is now expected to range between $1.35 billion and $1.38 billion, up from $1.27 billion in 2025. The prior guidance was $1.34-$1.38 billion for the metric.
Adjusted EPS from continuing operations is projected to be between $5.89 and $6.11, reflecting an increase from $5.45 in 2025. The earlier guidance for the metric was $5.81-$6.10.
Adjusted free cash flow is presently forecasted to be $760-$875 million, down from the earlier guidance of $765-$890 million. Maintenance capex is expected to remain in the range of $225-$240 million.
The company expects to open eight de novo hospitals, adding a total of 389 beds. It plans to add 150 to 200 beds to its existing hospitals. It also expects to open freestanding hospitals, including remote and satellite locations, with more than 30 beds beginning in 2026.
Growth Targets Reaffirmed
Over the 2023-2027 period, management aims to inaugurate six to 10 de novos each year, as well as make bed additions in the range of 80-120 every year. It also expects a CAGR of 6-8% in discharges in the same time frame.
Zacks Rank
Encompass Health currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Medical Sector Releases
Here are some stocks from the broader Medical space that have also reported their quarterly results: HCA Healthcare, Inc. (HCA - Free Report) , The Ensign Group, Inc. (ENSG - Free Report) and Tenet Healthcare Corporation (THC - Free Report) .
HCA Healthcare reported first-quarter 2026 adjusted earnings per share of $7.15, slightly below the Zacks Consensus Estimate of $7.17, though up 10.9% year over year. Revenues increased 4.3% to $19.1 billion but narrowly missed the consensus estimate by 0.1%. HCA’s performance was affected by declines in same-facility inpatient and outpatient surgeries, along with elevated operating expenses, partially offset by modest growth in emergency room visits.
Ensign Group reported a first-quarter 2026 adjusted EPS of $1.85, which beat the Zacks Consensus Estimate by 3.4%. The bottom line improved 21.7% year over year. Operating revenues advanced 18.4% year over year to $1.4 billion. The top line marginally missed the consensus mark by 0.07%. ENSG’s strong performance was driven by higher occupancy, patient days and contributions from newly acquired and transitioning facilities, along with growth in rental income. However, these gains were partly offset by increased expenses.
Tenet Healthcare reported first-quarter 2026 adjusted earnings per share of $4.82, which surpassed the Zacks Consensus Estimate by 14.5%. The bottom line increased 10.6% year over year. Net operating revenues advanced 2.8% year over year to $5.37 billion. The top line marginally missed the consensus mark by 0.4%. THC’s quarterly performance was driven by strong same-facility revenue growth, higher adjusted admissions, and solid contributions from acquisitions that supported the Ambulatory Care segment. However, these gains were partially offset by an unfavorable payer mix and increased operating costs, particularly higher supply expenses.