Revenue: As of FY2026 Q2, the actual value is USD 1.597 B, beating the estimate of USD 1.571 B.

EPS: As of FY2026 Q2, the actual value is USD 1.54, beating the estimate of USD 1.4629.

EBIT: As of FY2026 Q2, the actual value is USD 294.4 M.

Non-GAAP Financial Measures

Encompass Health Corporation uses several non-GAAP financial measures to assess performance and liquidity. Adjusted earnings per share from continuing operations attributable to Encompass Health Corporation provides better comparability of ongoing operating performance by excluding specific non-recurring or non-operational impacts such as settlements, professional fees, mark-to-market adjustments, and debt extinguishment losses.

The leverage ratio is defined as the ratio of consolidated total debt to Adjusted EBITDA for the trailing four quarters, indicating the company’s ability to service debt and make capital expenditures.

Adjusted EBITDA is a key liquidity measure and a component of covenants in Encompass Health Corporation’s credit agreement, which allows for adjustments like adding back interest expense, income taxes, depreciation, and amortization to consolidated net income, along with certain unusual or nonrecurring items and subtracting items that increase consolidated net income.

Adjusted free cash flow is an analytical indicator of Encompass Health Corporation’s capacity to reduce debt, pursue development, and return capital to stockholders, defined as net cash provided by operating activities of continuing operations minus maintenance capital expenditures, distributions to noncontrolling interests, and certain non-ongoing performance items.

Summary Results (Three Months Ended June 30, 2026 vs. 2025)

Revenue

Net Operating Revenue increased by 9.6% to $1,597.4 million in Q2 2026 from $1,457.7 million in Q2 2025. Inpatient revenue was $1,551.6 million, up 9.8% from $1,413.7 million, while other revenue increased by 4.1% to $45.8 million, including a $2.9 million increase in Medicaid supplemental payments.

Net Income and Profitability

Net Income Attributable to Encompass Health Corporation increased to $153.9 million in Q2 2026 from $142.1 million in Q2 2025. Net income was $207.4 million in Q2 2026, compared to $184.9 million in Q2 2025. Income from continuing operations was $208.0 million in Q2 2026, up from $185.8 million in Q2 2025. Income from continuing operations before income tax expense was $261.6 million in Q2 2026, compared to $236.8 million in Q2 2025.

Adjusted EBITDA grew by 9.2% to $348.0 million in Q2 2026 from $318.6 million in Q2 2025.

Operating Expenses

Total Operating Expenses increased to $1,309.0 million in Q2 2026 from $1,198.6 million in Q2 2025. Salaries and benefits were $820.3 million (51.4% of revenue) in Q2 2026, compared to $767.7 million (52.7% of revenue) in Q2 2025. Other operating expenses were $254.9 million in Q2 2026, up from $213.8 million in Q2 2025, including a $14.4 million increase in provider tax expenses. Occupancy costs were $14.7 million (0.9% of revenue) in Q2 2026, consistent with Q2 2025. Supplies were $66.1 million (4.1% of revenue) in Q2 2026, compared to $63.1 million (4.3% of revenue) in Q2 2025. General and administrative expenses were $62.6 million in Q2 2026, compared to $59.4 million in Q2 2025. General and administrative expenses were -$45.0 million (2.8% of revenue) in Q2 2026, compared to -$41.7 million (2.9% of revenue) in Q2 2025. Depreciation and amortization increased to $90.4 million in Q2 2026 from $79.9 million in Q2 2025.

Cash Flow

Cash Flows Provided by Operating Activities rose by 4.6% to $282.6 million in Q2 2026 from $270.2 million in Q2 2025.Adjusted Free Cash Flow decreased by -4.8% to $177.0 million in Q2 2026 from $185.9 million in Q2 2025.

Other Financial Data

Loss on early extinguishment of debt was $3.2 million in Q2 2026, compared to $0 million in Q2 2025.Interest expense and amortization of debt discounts and fees increased to $32.8 million in Q2 2026 from $30.4 million in Q2 2025.Other income was -$9.1 million in Q2 2026, compared to -$6.7 million in Q2 2025.Equity in net income of nonconsolidated affiliates was -$0.1 million in Q2 2026, compared to -$1.4 million in Q2 2025.Provision for income tax expense was $53.6 million in Q2 2026, compared to $51.0 million in Q2 2025.(Loss) income from discontinued operations, net of tax, was -$0.6 million in Q2 2026, compared to -$0.9 million in Q2 2025.Net income attributable to noncontrolling interests was -$53.5 million in Q2 2026, compared to -$42.8 million in Q2 2025.

Summary Results (Six Months Ended June 30, 2026 vs. 2025)

Revenue

Net Operating Revenues increased to $3,184.0 million in H1 2026 from $2,913.1 million in H1 2025, a 9.3% increase.

Net Income and Profitability

Net Income Attributable to Encompass Health Corporation increased to $348.4 million in H1 2026 from $293.6 million in H1 2025. Net income was $455.6 million in H1 2026, compared to $381.4 million in H1 2025. Income from continuing operations was $440.3 million in H1 2026, up from $382.8 million in H1 2025. Income from continuing operations before income tax expense was $550.3 million in H1 2026, compared to $475.4 million in H1 2025.

Adjusted EBITDA increased to $696.8 million in H1 2026 from $632.2 million in H1 2025, a 10.2% increase.

Operating Expenses

Total Operating Expenses increased to $2,594.0 million in H1 2026 from $2,387.0 million in H1 2025. Salaries and benefits were $1,638.4 million in H1 2026, compared to $1,530.0 million in H1 2025. Other operating expenses were $496.8 million in H1 2026, compared to $431.3 million in H1 2025. Occupancy costs were $29.9 million in H1 2026, compared to $29.6 million in H1 2025. Supplies were $130.4 million in H1 2026, compared to $125.3 million in H1 2025. General and administrative expenses were $120.8 million in H1 2026, compared to $111.7 million in H1 2025. Depreciation and amortization increased to $177.7 million in H1 2026 from $159.1 million in H1 2025.

Cash Flow

Cash Flows Provided by Operating Activities increased to $595.7 million in H1 2026 from $558.8 million in H1 2025.Adjusted Free Cash Flow decreased to $370.8 million in H1 2026 from $408.3 million in H1 2025. Components for H1 2026 included Adjusted EBITDA of $696.8 million, working capital and other of $64.6 million, cash interest expense of -$12.7 million, cash tax payments of -$2.6 million, and maintenance capital expenditures of -$55.9 million.Net cash used in investing activities was -$385.7 million in H1 2026, primarily due to capital expenditures, compared to -$323.9 million in H1 2025.Net cash used in financing activities was -$179.4 million in H1 2026, mainly due to common stock repurchases, distributions to noncontrolling interests, and cash dividends, partially offset by net debt borrowings, compared to -$220.6 million in H1 2025.

Other Financial Data

Loss on early extinguishment of debt was $3.4 million in H1 2026, compared to $0 million in H1 2025.Interest expense and amortization of debt discounts and fees was $64.6 million in H1 2026, compared to $62.2 million in H1 2025.Other income was -$27.8 million in H1 2026, compared to -$9.2 million in H1 2025.Equity in net income of nonconsolidated affiliates was -$0.5 million in H1 2026, compared to -$2.3 million in H1 2025.Provision for income tax expense was $110.0 million in H1 2026, compared to $92.6 million in H1 2025.(Loss) income from discontinued operations, net of tax, was $15.3 million in H1 2026, compared to -$1.4 million in H1 2025.Net income attributable to noncontrolling interests was -$107.2 million in H1 2026, compared to -$87.8 million in H1 2025.

Operational Metrics (Three Months Ended June 30, 2026 vs. 2025)

Discharges increased by 5.6% to 68,895 in Q2 2026 from 65,237 in Q2 2025. Same-store discharge growth was 2.8% in Q2 2026, and new-store discharge growth was also 2.8%.Net Patient Revenue per Discharge increased by 3.9% to $22,521 in Q2 2026 from $21,670 in Q2 2025.Occupancy % was 77.4% in Q2 2026, compared to 76.6% in Q2 2025.The number of licensed beds was 11,641, up from 11,233 in Q2 2025.Total Full-Time Equivalents (FTEs) were 30,133, up from 29,163 in Q2 2025.

Balance Sheet Highlights (June 30, 2026 vs. December 31, 2025)

Cash and cash equivalents were $107.7 million at June 30, 2026, compared to $72.2 million at December 31, 2025.Accounts receivable were $687.3 million, up from $619.2 million.Total assets increased to $7,457.5 million from $7,089.7 million.Total liabilities increased to $3,996.4 million from $3,813.9 million.Total shareholders’ equity increased to $3,403.2 million from $3,217.5 million.Long-term debt was $2,634.0 million as of June 30, 2026, compared to $2,490.8 million as of December 31, 2025.Net leverage was 1.9x, and Debt to Adjusted EBITDA was 2.0x as of June 30, 2026, consistent with December 31, 2025.

Debt and Shareholder Actions

Encompass Health Corporation issued $500 million of 5.875% Senior Notes due 2034 and redeemed $400 million of 4.50% Senior Notes due 2028 in Q2 2026.The board approved an increase in the common stock repurchase authorization to $1 billion. The company repurchased 703,877 shares for $74.2 million in Q2 2026, and 1,411,842 shares for $145.8 million year-to-date, with approximately $188 million remaining under the prior authorization as of June 30, 2026.Quarterly dividends of $0.19 per share were paid in April 2026, and a $0.21 per share cash dividend was declared in July 2026.

Capacity Additions

Encompass Health Corporation opened three hospitals totaling 139 beds and added 54 beds to existing hospitals during the first half of 2026, including a 50-bed hospital in Concordville, PA, and a 40-bed hospital in Loganville, GA in Q2 2026. Net pre-opening and ramp-up costs were $6.9 million in Q2 2026 and $10.9 million year-to-date.

Outlook / Guidance (Full-Year 2026)

Encompass Health Corporation increased its full-year 2026 guidance, projecting Net Operating Revenue between $6,410 million and $6,490 million, and Adjusted EBITDA between $1,365 million and $1,395 million. Adjusted earnings per share from continuing operations is anticipated to be $6.02 to $6.25. The company expects Medicare pricing to increase by approximately 3.0% for Q1-Q3 and 2.3% for Q4, with Managed Care pricing increasing by 2.0% to 3.0%, and plans to add 8 new hospitals with 389 beds and 150 to 200 beds to existing hospitals in 2026, with net pre-opening and ramp-up costs projected between $18 million and $22 million.