Encompass Health Corporation (EHC) Earnings
Encompass Health Corporation is expected to report next earnings on August 3, 2026 (in NaN days), with a consensus EPS estimate of $1.48. EHC has beaten EPS estimates in 11 of its last 12 reported quarters (average surprise +9.4% over the last four).
| Report date | EPS est | EPS actual | Surprise | Revenue | Rev. surprise |
|---|---|---|---|---|---|
| May 1, 2026 | $1.51 | $1.60 | +6.0% | $1.6B | +1.2% |
| Feb 5, 2026 | $1.29 | $1.46 | +13.2% | $1.5B | -2.5% |
| Oct 29, 2025 | $1.19 | $1.23 | +3.4% | $1.5B | -4.1% |
| Apr 24, 2025 | $1.19 | $1.37 | +15.1% | $1.5B | +2.1% |
| Feb 6, 2025 | $1.05 | $1.17 | +11.4% | $1.4B | +1.7% |
| Feb 7, 2024 | $0.82 | $0.95 | +15.9% | $1.2B | +0.8% |
| Oct 26, 2023 | $0.77 | $0.86 | +11.7% | $1.2B | +1.1% |
| Aug 1, 2023 | $0.75 | $0.95 | +26.7% | $1.2B | +2.3% |
| Apr 27, 2023 | $0.70 | $0.88 | +25.7% | $1.2B | +0.1% |
| Feb 7, 2023 | $0.83 | $0.88 | +6.0% | $1.1B | +1.4% |
| Oct 26, 2022 | $0.64 | $0.67 | +4.7% | $1.1B | +2.3% |
| Feb 1, 2022 | $1.05 | $0.97 | -7.6% | $1.3B | +1.0% |
Source: company filings + earnings calendar. For informational purposes only — not investment advice.
Earnings call summary
Q1 FY2026 · May 1, 2026
AI summary of management’s prepared remarks and analyst Q&A. For informational purposes only — not investment advice.
Management highlights
- Pleased with start to 2026 with revenue and adjusted EBITDA growth. - Discharge community, acute, and SNF rates improved. - Invested in clinical staff development programs, seeing improved turnover trends. - Demand for IRF services strong, opened new hospital and added beds, plans to open more hospitals and add beds. - Addressed regulatory developments like TEAM implementation and RCD expansion. - CMS 2027 IRF proposed rule included 2.4% net market basket update.
Guidance
Based on Q1 results, raised 2026 guidance: now expect net operating revenue of $6.375 to $6.470 billion, adjusted EBITDA of $1.35 to $1.38 billion, and adjusted earnings per share of $5.89 to $6.11. Free cash flow came down due to upward revisions in interest expense and cash taxes, but actual cash available increased. Midpoint of free cash flow estimate for the year is roughly $818 million, with growth capex estimate midpoint $725 million.
Segment performance
First quarter revenue increased 9% to $1.59 billion, and adjusted EBITDA increased 11.2% to $348.8 million. Revenue increase was due to 4.3% discharge growth (inclusive of 1.6% same-store discharge growth) and 3.7% increase in net revenue per discharge. Bad debt expense increased 20 basis points to 2.2%. Closure of four units impacted discharge growth. Q1 SWB per FTE increased 3.7%. Premium labor costs declined $2.7 million. Net pre-opening and ramp-up costs were $4 million. Q1 adjusted free cash flow was $194 million. Net leverage at quarter end was 1.9 times.
Risks & headwinds
Risks include regulatory developments, volume, bad debt, and cost trends that could cause actual results to differ materially from projections. Also, short-term transitory impacts to business from regulatory changes. MA trends and flu/respiratory season can impact volume. Occupancy challenges in some markets.
Analyst Q&A
Q: Regarding organic volume of discharge growth impacted by closures, what's the number if excluding closures?
A: Impact of closures was approximately 85 basis points, and impact will diminish through the year.
Q: What's driving low nursing turnover?
A: Centralized talent acquisition team, clinical ladders with about 35% of nursing staff on clinical ladders, turnover for laddered nurses was a little over 2% vs 20.7% for non-laddered.
Q: On same-store volumes, any other factors?
A: Factors include unit closures, occupancy levels, light flu/respiratory season, and MA trends.
Q: Initial reaction to Medicare proposal RFI?
A: Concept at this point, lacks details, not a site-neutral concept, too soon to tell.
Q: On MA trends, is it broadening to other payers?
A: Trends from Q4 to Q1 remain consistent, implementing admit and appeal strategy in nine hospitals with positive results.
Q: Ceiling for same-store discharge growth with capped occupancy?
A: Anticipate relatively small percentage increase over next year or two, with small format hospitals potentially solving for issues.
Q: Thoughts on buyback strategy?
A: Using balance sheet to buy back shares at current levels is attractive, with free cash flow and growth capex considered.
Q: On occupancy and small format hospitals, ROI and CON?
A: ROI falls between bed expansion and de novo, in CON states, small format hospitals tend to have lower CON hurdles.
Q: On market landscape and SNFs?
A: SNFs may be increasing investments, but IRFs have opportunity to capture market share as baby boomers age.
Q: On bed expansions and free cash flow adjustment?
A: Pre-opening costs $4 million in quarter, full year $18 - $22 million, free cash flow revised down due to interest expense and cash taxes increases but actual cash available increased.