The raised guidance midpoint for adjusted EPS ($6.30) implies Q4 adjusted EPS of approximately $1.63, above the Q3 run rate. Monitor the billing system conversion disruption (bad debt up 80bps) and RCD expansion to 108 IRFs in January 2027 for potential headwinds.
Price Chart
Executive Summary
Encompass Health reported Q3 2026 net operating revenue of $1,609.5M (up 8.9% YoY) and adjusted EPS of $1.52 (up 23.6% YoY), beating the consensus estimate of $1.36. The company raised full-year 2026 guidance for revenue, Adjusted EBITDA, and adjusted EPS, reflecting strong volume growth (5.7% discharge growth) and margin expansion.
Key Financial Metrics
Key Facts
- Q3 2026 net operating revenue $1,609.5M, up 8.9% YoY from $1,477.5M
- Adjusted EPS $1.52 vs consensus $1.36, a beat of 11.8%
- GAAP diluted EPS from continuing operations $1.51 vs $1.24 YoY, up 21.8%
- Adjusted EBITDA $346.6M, up 15.5% YoY from $300.1M
- Total discharges 69,605, up 5.7% YoY; same-store discharge growth 3.0%
- Net patient revenue per discharge $22,543, up 4.0% YoY
- Full-year 2026 guidance raised: revenue to $6,450M-$6,500M, Adjusted EBITDA to $1,395M-$1,415M, adjusted EPS to $6.23-$6.37
- Operating cash flow $362.0M, up 33.7% YoY; adjusted free cash flow $263.4M, up 51.2% YoY
- Repurchased 494,657 shares for $57.9M in Q3; $203.7M YTD
- Net leverage 1.8x; board increased stock repurchase authorization to $1.0B
Financial Impact
Revenue growth of 8.9% YoY, adjusted EPS growth of 23.6% YoY, and raised full-year guidance across all key metrics
Segment Breakdown
| Segment | Revenue | Growth |
|---|---|---|
| Inpatient | $1.6B | +9.9% |
| Other | $40.4M | -19.5% |
Risk Factors
- Bad debt as a percent of revenue increased 80bps to 2.7% due to a billing system conversion disruption in Q2 2026
- Medicaid supplemental payments decreased $10.0M in Q3
- CMS Review Choice Demonstration (RCD) expanding to 108 IRFs effective January 2027, adding regulatory uncertainty
- Provider tax expenses increased $1.5M in Q3
Market Snapshot
Investment Themes
Documents Analyzed
This report is based on 7 SEC documents filed with EDGAR.
| Document | Accession Number |
|---|---|
| 8-K Filing (Primary) | 0000785161-26-000236 |
| Document: ehcq32026earningsslides_.htm | 0000785161-26-000236 |
| Document: ehc-20261028.htm | 0000785161-26-000236 |
| Document: 0000785161-26-000236-index-headers.html | 0000785161-26-000236 |
| Document: 0000785161-26-000236-index.html | 0000785161-26-000236 |
| Document: 0000785161-26-000236.txt | 0000785161-26-000236 |
| 8-K Data (Synthetic) | 0000785161-26-000236 |
Filters
| Type | Now | ||||
|---|---|---|---|---|---|
Oct 28, 2026 1d ago | 8-K | No price | awaiting T+1 | awaiting T+1 | No price |
Oct 28, 2026 1d ago | Press Release | $115.00 | awaiting T+1 | awaiting T+1 | $131.49 (+14.34%) |
Oct 27, 2026 2d ago | Institutional Cluster | $122.09 $131.49 | ▲ +7.70% | ▲ +8.08% | $131.49 (+7.70%) |
Oct 23, 2026 6d ago | Institutional Cluster | $124.09 $124.10 | ▲ +0.01% | ▼ −0.70% | $131.49 (+5.96%) |
Oct 22, 2026 7d ago | Press Release | $126.01 $124.09 | ▼ −1.52% | ▼ −1.00% | $131.49 (+4.35%) |
Oct 1, 2026 28d ago | Press Release | $119.80 $120.97 | ▲ +0.98% | ▲ +0.30% | $131.49 (+9.76%) |
Sep 1, 2026 8w ago | Insider Cluster | $122.05 $121.18 | ▼ −0.71% | ▼ −1.16% | $131.49 (+7.73%) |
Aug 11, 2026 11w ago | Insider Cluster | $125.35 $124.83 | ▲ +0.41% | ▲ +0.67% | $131.49 (−4.90%) |
Aug 5, 2026 12w ago | Press Release | $124.82 $125.23 | ▲ +0.33% | ▼ −0.28% | $131.49 (+5.34%) |
Jul 9, 2026 16w ago | Press Release | $110.16 $110.01 | ▼ −0.13% | ▲ +0.65% | $131.49 (+19.36%) |
US Market Status
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