Encompass Health (EHC) Q2 2026 earnings summary

Executive summary

• Q2 2026 net operating revenue rose 9.6% year-over-year to $1,597.4 million, with Adjusted EBITDA up 9.2% to $348.0 million and adjusted EPS up 10.7% to $1.55.

• Discharges grew 5.6% year-over-year, and net patient revenue per discharge increased 3.9%.

• Opened three new hospitals and added 54 beds in H1 2026; five more hospitals and 100–150 beds planned for the remainder of 2026.

• Guidance for 2026 was raised, reflecting strong Q2 results and continued demand for inpatient rehabilitation services.

• Continued shareholder returns through increased dividends and expanded share repurchase authorization to $1 billion.

Financial highlights

• Net patient revenue per discharge increased 3.9% year-over-year to $22,521 in Q2.

• Adjusted free cash flow for Q2 was $177.0 million, down 4.8% year-over-year.

• Premium labor costs declined $2.6 million to $25 million, with contract labor FTEs at 1.1% of total FTEs.

• Bad debt expense was 2.3% of revenue, in line with expectations.

• Quarterly dividend increased to $0.21 per share, effective October 2026.

Outlook and guidance

• Full-year 2026 guidance: 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.

• Medicare pricing for Q4 assumes a 2.3% increase per the IRF final rule.

• 8 new hospitals (389 beds) and 150–200 beds to existing hospitals planned for 2026.

• Maintenance CAPEX expected at $225–$240 million; adjusted free cash flow guidance $760–$865 million.

• SWB per FTE growth expected at 3.5–4% for 2026.