Encompass Health Corp. reported first‑quarter 2026 results that showed net operating revenue of $1.586 billion, a 9.0% year‑over‑year increase, and adjusted earnings per share of $1.60, up 16.8% from the same period a year earlier and 9.6% from the prior quarter. Adjusted EBITDA rose 11.2% to $348.8 million. The company’s revenue beat the consensus estimate of $1.58 billion by roughly $10 million, while adjusted EPS matched the consensus estimate of $1.60, and diluted EPS of $1.93 exceeded the $1.51 estimate.
The quarter also marked a significant capacity expansion. Encompass Health opened a new 49‑bed hospital in Irmo, South Carolina, on March 3 2026 and added 44 beds across existing facilities. Management indicated that for the full year 2026 the company plans to open eight hospitals with a total of 389 beds and add approximately 175 beds to existing hospitals, underscoring a continued focus on scaling its inpatient rehabilitation network.
Full‑year 2026 guidance was raised to a net operating revenue range of $6.375 billion to $6.470 billion and an adjusted EPS range of $5.89 to $6.11, an upward revision that reflects confidence in sustained demand and margin expansion. The guidance increase follows the strong quarterly performance and the company’s ongoing investment in capacity.
Management highlighted the impact of the expansion on performance, stating, "We are very pleased with our start to 2026 as first quarter revenue increased 9.0% and Adjusted EBITDA grew 11.2%." In a subsequent earnings‑call transcript, the CEO added, "We are pleased with our start to 2026 as first quarter revenue increased 9% and adjusted EBITDA increased 11.2%. Based primarily on the Q1 results, we are raising our guidance for 2026." The company also noted that its primary use of free cash flow continues to be capacity expansions, and that it achieved strong patient outcomes, with discharge community, acute, and SNF rates improving by 50, 30, and 20 basis points respectively.
Encompass Health’s financial health remains solid, with a net leverage ratio of 1.9x and a debt maturity profile that extends to March 2031. The company’s scale advantage as the largest owner and operator of inpatient rehabilitation hospitals in the United States, combined with a growing demand for rehabilitation services driven by an aging population, positions it well for continued growth.
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