Encompass Health (EHC) Q4 2025 earnings summary

Executive summary

• Net operating revenue for 2025 was $5,935.2 million, up 10.5% year-over-year; Q4 revenue grew 9.9% to $1,544.6 million compared to Q4 2024.

• Adjusted EBITDA for 2025 reached $1,267.9 million, a 14.9% increase year-over-year; Q4 Adjusted EBITDA rose 15.9% to $335.6 million.

• Adjusted EPS for 2025 was $5.45, up 23.0% from 2024; Q4 Adjusted EPS was $1.46, a 24.8% increase.

• Added 517 beds in 2025 through eight new hospitals and expansions; 127 beds were added to existing hospitals.

• Strong balance sheet with net leverage at 1.9x and significant capital returned to shareholders.

Financial highlights

• Net patient revenue per discharge increased 4.1% year-over-year to $22,273 in Q4.

• Q4 discharge growth was 5.3%, with same-store discharge growth of 3.2%.

• Q4 adjusted free cash flow increased 23.6% to $235.4 million; full-year free cash flow up 18.5% to $817.9 million.

• Salaries and benefits were 51.9% of revenue in Q4 2025, down from 53.9% in Q4 2024.

• Bad debt expense held steady at 2.1% for Q4.

Outlook and guidance

• 2026 guidance: net operating revenue of $6,365–$6,465 million, adjusted EBITDA of $1,340–$1,380 million, and adjusted EPS of $5.81–$6.10.

• Free cash flow for 2026 expected at $828 million, with capital expenditures of $725 million and dividends at $77 million.

• 2026 capacity additions: 8 new hospitals (389 beds) and ~175 beds to existing hospitals.

• Medicare pricing expected to increase 3.0%; managed care pricing up 2.0–3.0%.

• Labor cost per FTE expected to rise 3.0–3.5%; tax rate ~26%.