Encompass Health Q4 EPS Surges 24.8% to $1.46, Revenues Top $1.5 Billion
Encompass Health’s Q4 adjusted EPS rose 24.8% to $1.46, beating estimates by 13.2% on a 9.9% revenue increase to $1.5 billion. Discharges climbed 5.3% to 67,238 but slightly missed forecasts, while operating expenses grew 7.5%, offsetting some margin gains.
1. Q4 Financial Results
Encompass Health reported adjusted Q4 EPS of $1.46, up 24.8% year over year and 13.2% above estimates, on net operating revenues of $1.5 billion, a 9.9% increase that slightly outpaced consensus by 0.2%. Net income rose 23.7% to $203.1 million and adjusted EBITDA climbed 15.9% to $335.6 million.
2. Operational Metrics
Net patient revenue per discharge increased 4.1% year over year, while total discharges grew 5.3% to 67,238 but fell 0.3% short of forecasts. The company added 37 beds and opened three de novo hospitals in the quarter, as operating expenses rose 7.5% due to higher salaries, benefits and administrative costs.
3. Capital and Liquidity
Encompass Health ended the quarter with $72.2 million in cash and cash equivalents, net debt of $2.4 billion and shareholders’ equity of $3.2 billion. The company generated $346 million of operating cash flow and $235.4 million of adjusted free cash flow, while deploying $158 million in share repurchases and paying a $0.19 dividend.
4. 2026 Outlook and Growth Targets
Management forecasts 2026 net operating revenues of $6.365–6.465 billion, adjusted EBITDA of $1.34–1.38 billion and EPS of $5.81–6.10, with free cash flow between $765 million and $890 million. The company plans to open eight de novo hospitals adding 389 beds, expand existing facilities by 175 beds and pursue 6–10 new hospitals and 80–120 bed additions annually through 2027.