(NYSE: EHC) today announced the appointment of Cain A. Hayes to its board of directors. Hayes joins the Encompass Health board ...][More Releases From This Source]## Explore[Health Care & Hospitals][Medical Pharmaceuticals][Corporate Expansion][News Releases in Similar Topics]---- -- Encompass Health announces plans to build a 50-bed inpatient rehabilitation hospital in Flowood, Mississippi [Accessibility Statement] Skip NavigationBIRMINGHAM, Ala. and FLOWOOD, Miss., Feb. 13, 2026 /PRNewswire/ -- Encompass ...

DALLAS--(BUSINESS WIRE)--Enhabit, Inc. (NYSE: EHAB) announced today that, along with Encompass Health Corporation (NYSE: EHC), they have collected $43.1 million in full satisfaction of their claims for attorneys' fees and mitigation damages in the Delaware Court of Chancery against former officer Chris Walker, Vistria Group senior partner David Schuppan, and Nautic Partners managing director Christopher Corey. These claims related to the December 2024 judgment in favor of Enhabit and Encompass. ...

Executive VP and COO Patrick William Tuer sold 2,804 shares, indicating potential insights into the company's future performance.Q4 2025 results showed a 24.8% increase in adjusted EPS and a 9.9% rise in net operating revenues, surpassing Zacks Consensus Estimate.Strong financial metrics with a P/E ratio of 19.29, a low debt-to-equity ratio of 0.08, and a current ratio of 1.08, highlighting the company's financial resilience and operational leverage.Encompass Health Corporation (NYSE:EHC) is a prominent pla ...

While many segments of the healthcare services space trade on speculative disruption or unpredictable reimbursement dynamics, Encompass Health ( EHC ) provides a sustainable growth story of structural permanence. Not only is Encompass the largest providerI am an investor specializing in the consumer products sector with a focus on identifying companies that offer a unique combination of strong brand recognition, solid financials, and growth potential. I have a keen eye for consumer trends and an in-depth un ...

Key Takeaways Encompass Health posted Q4 adjusted EPS of $1.46, up 24.8% year over year, beating consensus by 13.2%.EHC grew revenues on higher discharges and revenue per discharge, supported by inpatient and other revenues.Encompass Health added beds and a de novo hospital, as rising salaries and benefits increased expenses.Encompass Health Corporation (EHC) reported fourth-quarter 2025 adjusted earnings per share (EPS) of $1.46, which beat the Zacks Consensus Estimate by 13.2%. The bottom line increased 2 ...

Financial Performance - In Q4, revenue increased by 9.9% to $1.5 billion, and adjusted EBITDA rose by 15.9% to $335.6 million, driven by 5.3% discharge growth and a 4.1% increase in net revenue per discharge [1][5] - For the full year 2025, revenue grew by 10.5%, with EBITDA increasing by 14.9%, supported by operating leverage and disciplined expense management [3][5] - Adjusted free cash flow for the full year was $818 million, reflecting an 18.5% increase [9] Labor and Operational Efficiency - Premium labor costs decreased significantly, down more than $21 million year-over-year in 2025, with Q4 premium labor at $23.8 million, the lowest since Q1 2021 [2][5][7] - The company added approximately 300 same-store registered nurses (RNs) during 2025, contributing to improved operational efficiency [7] Capacity Expansion and Growth Strategy - Management plans to add 517 beds in 2025 through new hospitals and expansions, with ongoing investments expected to meet a growing target demographic [12] - A new 24-bed small-format hospital prototype is set to launch in 2027 as part of a hub-and-spoke strategy [13] 2026 Guidance - For 2026, management guided net revenue of $6.365–6.465 billion, adjusted EBITDA of $1.34–1.38 billion, and adjusted EPS of $5.81–6.10, with a leverage target of approximately 1.83x [4][18] Regulatory and Payer Dynamics - The company reported a 93% affirmation rate for its Alabama hospitals under the RCD model, indicating effective engagement with CMS [16] - Management expressed concerns about challenges with a national Medicare Advantage payer, which affected conversion rates despite referral growth [20]

Financial Data and Key Metrics Changes - In Q4 2025, revenue increased by 9.9% to $1.5 billion, while adjusted EBITDA rose by 15.9% to $335.6 million, driven by 5.3% discharge growth and a 4.1% increase in net revenue per discharge [14][16] - For the full year 2025, revenue grew by 10.5%, and EBITDA increased by 14.9%, with premium labor costs declining by over $21 million from 2024 [6][11] Business Line Data and Key Metrics Changes - The company added 517 beds in 2025, with 390 from new hospitals and 127 from existing hospitals, reflecting ongoing investments in capacity [7] - The full-year discharge to community rate was 84.6%, with discharge to acute care at 8.6% and discharge to skilled nursing facilities (SNF) at 6.1%, all favorable compared to industry averages [6][7] Market Data and Key Metrics Changes - The company experienced strong fee-for-service growth in Q4, although challenges were noted with Medicare Advantage, particularly with one national payer that saw a significant drop in conversion rates [26][27] - The Veterans Affairs (VA) program represented 19% of managed care volume, with a growth rate of 22% for the year, indicating strong performance in this segment [30] Company Strategy and Development Direction - The company plans to augment its capacity expansion strategy by introducing small format hospitals starting in 2027, which will support a hub and spoke strategy in larger markets [7][8] - The company is actively engaging with regulatory bodies to ensure compliance and mitigate risks associated with changes in the IRF industry, particularly regarding the RCD and TEAM models [9][10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to adapt to regulatory changes and maintain growth, citing a strong demand for IRF services [10][11] - The initial guidance for 2026 includes net operating revenue of $6.365 billion to $6.465 billion and adjusted EBITDA of $1.34 billion to $1.38 billion, reflecting expectations for continued growth [17] Other Important Information - The company maintained a strong balance sheet with a year-end net financial leverage of 1.9x, allowing for flexibility in investments and shareholder distributions [11][16] - Significant investments were made in operations, including $158 million in share repurchases and over $70 million in cash dividends [11][16] Q&A Session Summary Question: Can you elaborate on volume trends and comp issues for 2026? - Management noted that Q4 faced challenging comps due to strong performance in the previous year, with new hospitals contributing to volume growth [20][21] Question: What is the payer mix and growth across different classes? - Fee-for-service growth was strong, but challenges were noted with Medicare Advantage, particularly with one payer that saw a drop in conversion rates [26][27] Question: How do pilot programs like TEAM typically play out? - Management indicated that past pilot programs have had mixed outcomes, with some being implemented nationally while others did not continue beyond the pilot phase [38][39] Question: What is the rationale behind adding small format hospitals? - The company aims to address market demand and capacity constraints with a new economically feasible model for smaller hospitals, enhancing service delivery in growing markets [90][91] Question: How is the company addressing malpractice concerns? - Management reported no significant changes in malpractice activity from 2024 to 2025, indicating stability in this area [85]

Financial Data and Key Metrics Changes - In Q4 2025, revenue increased by 9.9% to $1.5 billion, while adjusted EBITDA rose by 15.9% to $335.6 million [14] - For the full year 2025, revenue grew by 10.5%, driven by 6% discharge growth and pricing growth, with EBITDA increasing by 14.9% [6][11] - Bad debt expense for Q4 was 2.1%, flat year-over-year, and premium labor costs declined by $5.8 million from Q4 2024 [14][15] Business Line Data and Key Metrics Changes - The company added 517 beds in 2025, with 390 from new hospitals and 127 from existing hospitals [7] - The full-year discharge to community rate was 84.6%, with discharge to acute care at 8.6% and discharge to SNF at 6.1%, all favorable compared to industry averages [6][7] Market Data and Key Metrics Changes - The company experienced strong fee-for-service growth in Q4, although challenges were noted with Medicare Advantage, particularly with one national payer [26][27] - The VA program represented 19% of managed care volume, with a discharge growth of over 20% in Q4 [30] Company Strategy and Development Direction - The company plans to augment its capacity expansion strategy with small format hospitals starting in 2027, facilitating a hub and spoke strategy [7][8] - The company is actively engaging with CMS regarding regulatory changes and believes it is well-prepared for the expansion of RCD into Texas and California [9][10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to adapt to regulatory changes and maintain growth, citing a strong demand for IRF services [10][11] - The initial guidance for 2026 includes net operating revenue of $6.365 billion to $6.465 billion and adjusted EBITDA of $1.34 billion to $1.38 billion [17] Other Important Information - The company allocated $158 million to share repurchases and returned over $70 million in cash dividends in 2025, maintaining a strong balance sheet with a net leverage ratio of 1.9 times [11][16] - The company is implementing an admit and appeal strategy for Medicare Advantage denials, aiming to ensure compliance with Medicare coverage requirements [29][30] Q&A Session Summary Question: Volume evolution and comp issues for 2026 - Management noted that Q4 faced challenging comps due to strong prior year performance and unit consolidations impacting discharge rates [20][21][23] Question: Payer mix and Medicare Advantage challenges - Fee-for-service growth was strong, but there were significant challenges with one national Medicare Advantage payer, leading to a drop in conversion rates [26][27][28] Question: TEAM pilot program implications - Management explained that past pilot programs have had mixed outcomes, with some leading to national implementation while others did not [37][39] Question: Labor costs and staffing improvements - Management attributed lower labor costs to a softening labor market and improved staffing practices, with a notable decrease in turnover rates [50][52][55] Question: RCD experience in Alabama - The company reported a 93% affirmation rate in Alabama, with ongoing appeals for non-affirmed claims showing good success [63][66] Question: Small format hospitals strategy - Management discussed the advantages of small format hospitals, including cost-effectiveness and the ability to meet market demand without extensive new construction [90][92]

Financial Data and Key Metrics Changes - In Q4 2025, revenue increased by 9.9% to $1.5 billion, while adjusted EBITDA rose by 15.9% to $335.6 million, driven by a 5.3% growth in discharges and a 4.1% increase in net revenue per discharge [13][5][11] - For the full year 2025, revenue grew by 10.5%, and EBITDA increased by 14.9%, with premium labor costs declining by over $21 million compared to 2024 [5][11] Business Line Data and Key Metrics Changes - The company added 517 beds in 2025, with 390 from new hospitals and 127 from existing hospitals, reflecting ongoing investments in capacity [6][11] - The full-year discharge to community rate was 84.6%, discharge to acute care was 8.6%, and discharge to skilled nursing facilities (SNF) was 6.1%, all favorable compared to industry averages [5][6] Market Data and Key Metrics Changes - The company experienced strong fee-for-service growth in Q4, although challenges were noted with Medicare Advantage, particularly with one national payer that saw a significant drop in conversion rates [28][27] - The Veterans Affairs (VA) program represented 19% of managed care volume, with a 22% growth for the year, indicating strong performance in this segment [30][11] Company Strategy and Development Direction - The company plans to implement small format hospitals starting in 2027 as part of a hub and spoke strategy to address market demand [6][11] - The company is actively engaging with regulatory bodies to ensure compliance and adapt to changes in the IRF industry, including the implementation of the TEAM model [9][10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to adapt to regulatory changes and maintain growth, citing a strong demand for IRF services [10][11] - The company anticipates continued growth in 2026, with guidance for net operating revenue between $6.365 billion and $6.465 billion and adjusted EBITDA between $1.34 billion and $1.38 billion [16][11] Other Important Information - The company maintained a strong balance sheet with a year-end net financial leverage of 1.9 times, allowing for continued investments and shareholder distributions [11][15] - Significant investments were made in operations, including $158 million in share repurchases and over $70 million in cash dividends [11][15] Q&A Session Summary Question: Volume evolution and comp issues for 2026 - Management noted that the back half of 2025 faced challenging comps due to strong performance in the previous year, with new hospitals contributing to volume growth [20][21] Question: Payer mix and Medicare Advantage challenges - Fee-for-service growth was strong, but there were challenges with Medicare Advantage, particularly with a national payer that saw a drop in conversion rates [27][28] Question: TEAM pilot program and its implications - Management explained that the TEAM pilot program is similar to previous models and does not represent new risks, with expectations of continued growth despite regulatory changes [39][40] Question: Labor costs and staffing improvements - Management attributed improvements in labor costs to a softening labor market and effective staffing strategies, resulting in lower premium labor costs [51][52] Question: RCD experience in Alabama - The company reported a 93% affirmation rate in Alabama, with ongoing appeals for non-affirmed claims, indicating a strong position in managing regulatory challenges [66][69]

2025 Fourth Quarter Earnings Call February 6, 2026 Supplemental information Forward-looking statements The information contained in this presentation includes certain estimates, projections and other forward-looking information that reflect Encompass Health's current outlook, views and plans with respect to future events, including the business outlook, guidance and growth targets, future reimbursement rates, labor availability and costs, the effect of tariffs on costs, legislative and regulatory developmen ...