Encompass Health (EHC) investor relations material

Executive summary

• Q3 net operating revenue rose 8.9% YoY to $1,609.5M; Adjusted EBITDA increased 15.5% to $346.6M and adjusted EPS rose 23.6% to $1.52.

• Nine-month revenue increased 9.2% to $4,793.5M and Adjusted EBITDA rose 11.9% to $1,043.4M.

• FY26 guidance was raised for net operating revenue, Adjusted EBITDA and adjusted EPS.

• Discharges grew 5.7% to 69,605, with same-store growth of 3.0%.

Financial highlights

• Q3 inpatient revenue rose 9.9% to $1,569.1M; Other revenue fell 19.5% to $40.4M.

• Q3 adjusted free cash flow was $263.4M versus $174.2M; nine-month adjusted free cash flow was $634.2M versus $582.5M.

• Nine-month adjusted EPS was $4.67 versus $3.99.

• Q3 reported diluted EPS was $1.51 versus $1.24; adjusted EPS was $1.52 versus $1.23.

Outlook and guidance

• FY26 guidance: net operating revenue $6,450M–$6,500M, Adjusted EBITDA $1,395M–$1,415M and adjusted EPS $6.23–$6.37.

• FY26 adjusted free cash flow is expected at $770M–$865M; maintenance capex is forecast at $225M–$240M, cash taxes at $200M–$220M and cash interest at $115M–$125M.

• FY26 plans include eight new hospitals totaling 389 beds, 145–190 existing-hospital bed additions and $20M–$24M in net pre-opening and ramp-up costs.

• FY26 net provider tax contribution to Adjusted EBITDA is expected at ~$3M; Florida's pending Medicaid program could add ~$8M to Q4 EBITDA if CMS approves the proposal and waivers as submitted.

• FY27 IRF rule provides a 3.2% market-basket update less a 0.9% productivity adjustment, for an estimated 2.3% net Medicare rate increase effective Oct. 1, 2026.